EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0842803
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.
Dixon Asia Pacific applied for a TCO in respect of certain non malleable cast iron pipe fittings on 04 December 2008.
Instrument
TCO No 0842803 was made on 27 February 2009. It declares that those certain non malleable cast iron pipe fittings 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. 0842803 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 was enacted to provide a framework for the regulation of customs and excise duties in Australia. The Act was introduced to address the need for a structured approach to the imposition and collection of duties on imported goods, as well as to provide a mechanism for tariff concessions where appropriate. The Tariff Concession Instrument No. 0842803 was enacted by the Parliament of Australia to provide a pathway for the Chief Executive Officer of Customs to reduce or eliminate customs duties on specified goods under certain conditions. This particular instrument was introduced to address a gap where certain non malleable cast iron pipe fittings were not being produced in Australia and thus qualified for a tariff concession, benefiting the importer by removing the duty on these goods. The policy objective is to support industries where Australian production is not feasible by allowing duty-free importation of specified goods.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This scheme allows for the application of a lower rate of customs duty on specified goods. An entity or individual can apply for a TCO provided the goods in question are not those specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The CEO must determine if the application meets the core criteria outlined in section 269C, namely that no substitutable goods are produced in Australia in the ordinary course of business. If satisfied, the CEO issues a written TCO, applying a prescribed rate from the Customs Tariff Act 1995. The TCO process ensures that no person, other than the Commonwealth, is disadvantaged or imposed with liabilities for actions taken before the TCO's effective date, while potentially benefiting importers through duty refunds for imports since the TCO's commencement date.
Key Provisions
The main operative sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) are sections 269C, 269F, 269K, 269P, and 269S (subsections 269K(1) and 269S(1)). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the application is not for goods specified in section 269SJ, the CEO must assess whether it meets the core criteria, defined in section 269C, which involves determining if no substitutable goods were produced in Australia in the ordinary course of business at the time of application. If the application meets these criteria, the CEO must make a written order, as per section 269P(3), specifying the lower rate of duty applicable to the goods in question. Section 269K(1) mandates that the CEO must publish a notice in the Gazette inviting submissions from any person who may have objections to the TCO being made. Section 269S(1) specifies that the TCO is to be taken as coming into force on the day the application was lodged.
The Customs Act imposes several obligations on parties applying for a TCO. The applicant must ensure their application is not for goods specified in section 269SJ, which are ineligible for tariff concessions. The CEO has a duty to evaluate whether the application meets the core criteria set out in section 269C, which involves verifying that no substitutable goods were produced in Australia in the ordinary course of business on the date of application. Additionally, the CEO must publish a notice in the Gazette under section 269K(1), inviting any objections to the proposed TCO. The CEO must consider any submissions received before making a final decision on the application.
The Act also delineates the consequences for non-compliance or breaches related to the TCO process. While the explanatory statement does not detail specific offences under the Customs Act, breaches of customs regulations generally can result in civil or criminal penalties. Civil penalties can include fines, and in severe cases, criminal penalties may apply, which could result in imprisonment. The exact penalties would depend on the nature and severity of the breach, but they are set out in other sections of the Customs Act and associated regulations. The explanatory statement does not provide specific maximum penalties for breaches directly related to TCOs, but general penalties for customs violations can be substantial.