EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0841507
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.
Linatex Australia applied for a TCO in respect of certain hydrocyclone separators on 27 November 2008.
Instrument
TCO No 0841507 was made on 27 February 2009. It declares that those certain hydrocyclone separators 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. 0841507 is taken to have come into force on 27 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. 0841507, enacted in 2009 under the Customs Act 1901, addresses the need to provide tariff concessions for specific goods that are not produced domestically. This legislation allows the Chief Executive Officer of Customs to grant lower rates of customs duty on goods not manufactured in Australia, provided they meet certain criteria. The instrument was introduced to facilitate smoother importation processes and to support economic activities by making imported goods more affordable, thereby enhancing competitive advantages for businesses reliant on these imports. The policy objective of this measure is to ensure that the Australian market remains accessible to a broad range of goods, supporting both consumer choice and industrial needs without imposing undue burdens on domestic production.
Scope and Application
The Customs Act 1901 applies to individuals, businesses, and entities involved in importing goods into Australia, and it provides a framework for administering customs duties, including provisions for tariff concession orders (TCOs). These orders, administered by the Chief Executive Officer of Customs, apply to specific goods that meet certain criteria, such as the absence of substitutable goods produced in Australia, and can result in a reduction or elimination of customs duty on those goods. The application process requires the CEO to assess whether the goods are eligible for a TCO, based on whether they are specified in section 269SJ of the Act and whether no substitutable goods are produced domestically. Once a TCO is granted, it comes into effect on the date the application is lodged, and it can benefit importers by potentially reducing their duty obligations. The scope of the Act is national, applying across Australia, and while the Act itself provides the primary framework, subordinate instruments such as regulations may further detail the application process and eligibility criteria.
Key Provisions
The Customs Act 1901, under Part XVA, facilitates the establishment of Tariff Concession Orders (TCO) by the Chief Executive Officer (CEO) of Customs. When a TCO is applied for and approved, a lower rate of customs duty applies to the specified goods (s 269F). A TCO application is considered valid if it pertains to goods that are not listed in section 269SJ, which includes goods that cannot be subject to a TCO, and meets the core criteria outlined in section 269C. According to section 269C, an application meets the core criteria if, on the date it was lodged, there were no substitutable goods produced in Australia in the ordinary course of business. Definitions for key terms such as "goods produced in Australia", "ordinary course of business" and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that an application meets the core criteria, a TCO is issued, as per section 269P(3), which declares that the goods in question are subject to a prescribed item in Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations on the CEO of Customs and the applicant. The CEO must accept a TCO application as valid and determine whether it meets the core criteria. If the application is valid and meets the core criteria, the CEO is required to make a written order (TCO) and declare that the goods in question are subject to the prescribed tariff item. The CEO is also obligated to publish a notice in the Gazette, inviting any interested parties to submit objections to the TCO. Linatex Australia, for example, applied for a TCO in respect of certain hydrocyclone separators on 27 November 2008. The CEO was satisfied that the application met the core criteria and, therefore, a TCO was issued on 27 February 2009, declaring that these separators are subject to a tariff rate of free, as opposed to the general rate of 5%.
Under the Customs Act 1901, failure to comply with the provisions of the Act and the associated regulations can result in criminal and civil penalties. The Act does not explicitly state any criminal offences or penalties for non-compliance with TCOs, but non-compliance with the broader Customs Act or associated regulations may result in penalties. For example, section 238 of the Customs Act imposes a penalty of up to five times the amount of duty or tax evaded or a fine of up to $22,000 for individuals and up to $110,000 for bodies corporate, or both, for breaches related to dutiable goods. Furthermore, section 239A imposes a penalty of up to 25 penalty units, which equates to approximately $4,950 for individuals and $24,750 for bodies corporate, for failing to comply with an order or direction given under the Act. Additionally, section 269K(1) of the Act requires the CEO to publish a notice in the Gazette inviting objections to a TCO application. Failure to do so may result in legal challenges to the validity of the TCO.