EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0842822
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 applied for a TCO in respect of certain industrial circuit breakers on 05 December 2008.
Instrument
TCO No 0842822 was made on 27 February 2009. It declares that those certain industrial circuit breakers 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. 0842822 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 Customs Act 1901, enacted by the Parliament of Australia, establishes a framework for the administration of customs and excise duties. The Act was introduced to facilitate the regulation of imports and exports through the application of customs duties, ensuring compliance and revenue collection. Part XVA of the Customs Act 1901 addresses Tariff Concession Orders (TCOs), which allow for reduced customs duty rates on specified goods. The introduction of TCOs aims to provide relief to importers by lowering the duty on certain goods, provided that no substitutable goods are produced in Australia. This concession is designed to support economic activities by making imported goods more competitive with locally produced alternatives, thereby benefiting the rights of importers and potentially stimulating trade.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs), provides a framework for the Chief Executive Officer of Customs to grant lower rates of customs duty on specified goods. This Act applies to any person who wishes to import goods into Australia and seeks a tariff concession for those goods. The process involves an application to the CEO for a TCO, provided that the goods are not specified in section 269SJ of the Act, which lists goods ineligible for tariff concessions. The CEO must ensure that the application meets the core criteria, notably that no substitutable goods are produced in Australia in the ordinary course of business, as defined by the Act. If the CEO determines that these criteria are met, a TCO is issued, effectively applying a prescribed lower rate of duty on the specified goods. The geographic reach of this Act is national, as it applies across Australia, and the TCOs are subject to the provisions of the Customs Tariff Act 1995. Importantly, the TCOs do not affect any existing rights or impose new liabilities on persons other than the Commonwealth, ensuring that the rights of importers are beneficially impacted, particularly through potential duty refunds.
Key Provisions
The primary sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) are sections 269C, 269F, 269P, and 269S (paragraphs 1 and 3). Section 269F allows for the application of a TCO for goods by a person, while section 269C outlines the core criteria for the Chief Executive Officer of Customs (CEO) to consider when deciding on the application. If the CEO is satisfied that the application meets the core criteria, including that no substitutable goods are produced in Australia on the day the application is lodged, as per section 269C, they must issue a written order (TCO), as per section 269P(3). This order will then apply a reduced or free rate of customs duty on the specified goods, as per Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations on the parties involved in the TCO process. For applicants, the key requirement is to ensure that the application for a TCO is made in accordance with the provisions of the Customs Act 1901, specifically that the goods in question meet the core criteria outlined in section 269C. The CEO is obligated to assess the application and determine whether it meets the core criteria, including verifying the production status of substitutable goods in Australia. Additionally, the CEO must publish a notice in the Gazette inviting submissions on the application as soon as practicable after accepting it as valid, as per section 269K(1). Failure to comply with these obligations could result in the TCO not being issued or being subject to challenge.
There are no specific offences or penalties outlined in the Customs Act 1901 with respect to the TCO process itself. However, any breach of the terms and conditions of the TCO, such as fraudulent claims for tariff concessions, could result in civil or criminal penalties under other sections of the Customs Act or related legislation. The penalties for such offences can include fines and imprisonment, depending on the severity of the breach. The exact penalties would be determined in the context of the specific breach and the applicable law.
In summary, Tariff Concession Orders under the Customs Act 1901 provide a mechanism for reducing or eliminating customs duties on certain goods, subject to meeting specific criteria. The Act imposes clear obligations on applicants and the CEO to ensure that the TCO process is conducted fairly and in accordance with the law. While there are no specific penalties outlined for breaches of the TCO process, general penalties for breaches of the Customs Act and related legislation apply.