EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0840875
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.
Problem Management Engineering Pty Ltd applied for a TCO in respect of certain electro mechanical device on 24 November 2008.
Instrument
TCO No 0840875 was made on 27 February 2009. It declares that those certain electro mechanical device 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. 0840875 is taken to have come into force on 24 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 Customs Act 1901 was amended to include a scheme that allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) under Part XVA. This was enacted to address the need for a mechanism by which certain goods can benefit from a lower rate of customs duty if they meet specific criteria, thus promoting trade and economic efficiency. The problem this legislation sought to resolve was the lack of flexibility in the duty rates for certain imported goods, which could hinder their competitiveness against locally produced alternatives. The policy objective, as stated in the explanatory statement, is to provide a means for the CEO to reduce customs duty rates for goods where no substitutable goods are produced in Australia, thereby facilitating trade and economic activity. The instrument, Tariff Concession Instrument No. 0840875, was introduced to grant free duty on specific electro mechanical devices following an application by Management Engineering Pty Ltd, demonstrating the Act's application in a real-world scenario.
Scope and Application
The Customs Act 1901 applies to individuals and entities involved in the importation of goods into Australia, with specific provisions for Tariff Concession Orders (TCOs) under Part XVA. This legislation enables the Chief Executive Officer of Customs to grant tariff concessions on certain goods, thereby reducing the rate of customs duty applied to them. The application process for a TCO requires the applicant to demonstrate that no substitutable goods are produced in Australia, and the CEO must be satisfied that the application meets the specified criteria. The TCO in question, Instrument No. 0840875, was made for an electro mechanical device and is effective from 24 November 2008, the date the application was lodged. This order exempts the specified goods from the general 5% duty rate, instead applying a zero duty rate. The application of this concession does not disadvantage any existing rights of importers or impose new liabilities; in fact, it allows for potential refunds of duties paid on imports since the concession’s effective date.
Key Provisions
The main operative sections of this legislation concern Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided they meet certain criteria (subsection 269C). The CEO must then assess whether the application meets these criteria, specifically whether no substitutable goods are produced in Australia at the time the application is lodged (section 269C). If satisfied, the CEO must make a written order (TCO) that declares the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies (subsection 269P(3)). For example, in the case of TCO No. 0840875, certain electro mechanical devices were declared to be subject to a TCO, resulting in a duty rate of free instead of the general rate of 5%.
The Act imposes several obligations and requirements on the parties involved. The CEO is mandated to assess TCO applications to determine if they meet the core criteria specified in section 269C. This involves verifying that no substitutable goods are produced in Australia at the time of application. Additionally, the CEO must publish a notice in the Gazette, inviting submissions from any interested parties who believe the TCO should not be made (subsection 269K(1)). This ensures transparency and allows for public input on the application. Furthermore, the CEO must ensure that the rights of any person (other than the Commonwealth) are not adversely affected by the TCO in respect of actions taken before the TCO’s registration (subsection 269S(1)). Importers of goods subject to a TCO are entitled to apply for a refund of duty on goods imported since the TCO is deemed to have come into force (paragraph 126(1)(r) of the Regulations).
The legislation outlines specific offences, penalties, and consequences for breaches. While the explanatory statement does not explicitly state penalties, breaches of the Customs Act 1901 generally carry significant penalties. For instance, contravening provisions of the Act can result in fines and imprisonment. The exact penalties depend on the severity and nature of the offence, but they can include substantial fines up to several thousand dollars and imprisonment terms that vary according to the offence's seriousness. Additionally, civil consequences might include the confiscation of goods and the payment of duties and penalties to the Commonwealth. The precise penalties are detailed in other sections of the Customs Act and associated regulations.