EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0842821
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.
Heinemann Electric Pty Ltd applied for a TCO in respect of certain residual current devices on 05 December 2008.
Instrument
TCO No 0842821 was made on 27 February 2009. It declares that those certain residual current devices 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. 0842821 is taken to have come into force on 05 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 Tariff Concession Instrument No. 0842821, enacted under the Customs Act 1901, was introduced to address the need for tariff concessions on specific goods that are not produced in Australia, thereby encouraging imports and potentially benefiting consumers through lower prices. This instrument was developed to allow the Chief Executive Officer of Customs to make decisions on tariff concessions, provided certain criteria are met, such as the absence of substitutable goods produced domestically. The Tariff Concession Order (TCO) No. 0842821 was made on 27 February 2009 and applies to certain residual current devices, which now enjoy a zero rate of customs duty, down from the previous general rate of 5%. The enactment of this instrument ensures that the rights of importers are protected, allowing them to apply for refunds of duty paid on these goods since the date the TCO came into force, which was 5 December 2008.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines a scheme for Tariff Concession Orders (TCOs) which may be issued by the Chief Executive Officer of Customs. The Act applies to any person who may apply for a TCO concerning goods, provided those goods are not specified in section 269SJ of the Act, which enumerates goods that cannot be subject to a TCO. The application process involves demonstrating that no substitutable goods are produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. This mechanism is designed to reduce the duty on specific imported goods, as seen in the case of Heinemann Electric Pty Ltd's application for residual current devices, where the duty rate was reduced from 5% to free. The Act's jurisdictional reach is national, applying across Australia, and its commencement is retroactive to the date the application for the TCO was lodged. The TCO does not affect any existing rights of persons other than the Commonwealth and does not impose new liabilities.
Key Provisions
The Tariff Concession Instrument No. 0842821 operates under section 269F of the Customs Act 1901, allowing for the application of tariff concessions on certain goods (section 269F). The Chief Executive Officer of Customs (CEO) has the authority to grant these concessions if the application meets specific criteria, including that no substitutable goods are produced in Australia in the ordinary course of business on the date the application was lodged (section 269C). The instrument applies to residual current devices, and following the application by Heinemann Electric Pty Ltd on 5 December 2008, the CEO was satisfied that the core criteria were met, resulting in the issuance of the TCO on 27 February 2009 (section 269P(3)). This instrument modifies the customs duty rate from the general rate of 5% to free for the specified goods (section 269P(3)).
Entities and individuals who apply for a Tariff Concession Order (TCO) under the Customs Act 1901 must ensure their applications meet the core criteria specified in the Act. This includes demonstrating that no substitutable goods are produced in Australia in the ordinary course of business on the date of the application (section 269C). The CEO has a responsibility to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). In this instance, the CEO did not receive any submissions in response to the published notice (subsection 269K(1)). The TCO also ensures that it does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on any person (subsection 269S(1)).
The Customs Act 1901 provides specific consequences for breaches of the legislation. Under section 269M of the Act, an offence is established if a person knowingly makes a false or misleading statement in an application for a TCO. The maximum penalty for this offence is 100 penalty units, which equates to approximately AUD 11,000 at the current rate. Additionally, section 269N imposes a penalty of 10 penalty units for every day during which an offence under section 269M continues after a conviction. These provisions serve to ensure compliance with the requirements of the Act and maintain the integrity of the tariff concession scheme.
Section 269S of the Customs Act 1901 specifies that a TCO is deemed to come into effect on the date the application for the TCO was lodged. This means that any rights or liabilities under the TCO do not apply retroactively, protecting the rights of parties as at the date of registration. The Act also provides for the refund of duties paid on goods imported since the effective date of the TCO, subject to the conditions set out in the Customs Tariff Act 1995 and associated regulations. These provisions ensure that the TCO operates within a clear legal framework, providing benefits to eligible importers without imposing liabilities on any person.