EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0842574
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.
Webforge Australia applied for a TCO in respect of certain cast iron access covers and frames on 04 December 2008.
Instrument
TCO No 0842574 was made on 27 February 2009. It declares that those certain cast iron access covers and frames 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. 0842574 is taken to have come into force on 04 December 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 under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders allow for lower customs duty rates on specified goods, provided certain criteria are met. The Tariff Concession Instrument No. 0842574 was introduced to address the need for tariff concessions for specific imported goods, in this case, certain cast iron access covers and frames, to ensure they are not subject to duties when no substitutable goods are produced domestically. This instrument was made following an application by Webforge Australia on 4 December 2008, and it was effective from the same date. The Chief Executive Officer of Customs confirmed that the application met the core criteria, as no substitutable goods were produced in Australia at the time, and thus, a concession was granted, resulting in a duty-free status for the specified goods.
Scope and Application
The Tariff Concession Instrument No. 0842574 under the Customs Act 1901 applies to the concession of customs duty on certain cast iron access covers and frames, as specified in the Instrument. This Act is a Commonwealth legislation and therefore applies across Australia. The Act allows for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCO) which, if certain core criteria are met, lower the rate of customs duty on specified goods. The core criteria require that, at the time of the application, no substitutable goods were produced in Australia in the ordinary course of business. This Instrument was made following an application from Webforge Australia on 4 December 2008, and the TCO was effective from the same date, declaring that the specified cast iron access covers and frames are to be subject to a rate of duty of free, as opposed to the general rate of 5%. The TCO does not affect any pre-existing rights or liabilities of persons other than the Commonwealth, but importers can apply for a refund of duties paid on these goods since the effective date of the TCO. The Act allows for the scope and application of TCOs to be extended or restricted through subordinate instruments.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, and 269P, which outline the process for applying for and making a Tariff Concession Order (TCO). Section 269F permits an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the CEO is satisfied that the application does not pertain to goods specified in section 269SJ, which are ineligible for a TCO, the CEO must then determine whether the application meets the core criteria as set out in section 269C. If these criteria are met, the CEO is required, under section 269P(3), to issue a written TCO. This order specifies that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thereby applying a lower rate of customs duty to them.
The obligations imposed on the parties or entities governed by this Act include the requirement for applicants to ensure their applications meet the criteria outlined in section 269C, which mandates that no substitutable goods were produced in Australia on the day the application was lodged. The CEO is obligated to consider the application and, if it meets the criteria, to issue a written TCO. Additionally, under subsection 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. The CEO must also ensure that the TCO does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the TCO comes into force.
In terms of offences, penalties, or consequences for breach, the Act does not specify any criminal penalties for failing to comply with the TCO requirements. However, failure to adhere to the terms of the TCO may result in the imposition of the general rate of duty rather than the concessional rate. This means that if an applicant does not correctly apply for a TCO or if the CEO incorrectly issues a TCO, the full customs duty applicable to the goods will be payable. Furthermore, while the TCO does not impose liabilities on any person, any person who imports goods subject to the TCO without applying for a refund of duty may be subject to the standard customs duty rates.
The maximum penalty for breaches related to customs duty evasion or incorrect declarations is detailed in the Customs Act 1901 itself, where penalties can include fines and imprisonment. For example, section 226 of the Customs Act provides for penalties of up to 10,000 penalty units (currently AUD 1.7 million) or imprisonment for up to 10 years, or both, for serious offences such as smuggling or serious breaches of the customs regulations. Therefore, while the TCO itself does not directly impose penalties, the overarching customs legislation provides substantial deterrents against non-compliance.