EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0901175
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.
Kohki Pty Ltd applied for a TCO in respect of certain annular cutters on 15 January 2009.
Instrument
TCO No 0901175 was made on 14 April 2009. It declares that those certain annular cutters 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. 0901175 is taken to have come into force on 15 January 2009.
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, provides a framework for the regulation of customs duties and provides for the making of Tariff Concession Orders (TCOs) under Part XVA. These orders allow for the application of lower rates of customs duty on certain goods. The problem or gap addressed by this legislation is the potential for economic disadvantage to Australian industries if there is competition from locally produced goods when concessional tariff rates are applied to imported goods. The instrument F2009L01991, made under this Act, aims to ensure that the concessional tariff rates apply only to imported goods for which there are no substitutable goods produced in Australia. The policy objective is to support Australian industries by ensuring that tariff concessions do not undermine local production and competitiveness. The instrument, TCO No. 0901175, was made on 14 April 2009, in response to an application by Kohki Pty Ltd for tariff concessions on certain annular cutters, and came into effect on 15 January 2009. The instrument was made after the Chief Executive Officer of Customs determined that there were no substitutable goods produced in Australia, thereby meeting the core criteria for a TCO. No submissions were received in opposition to the TCO, and the instrument has the effect of allowing the importation of the specified annular cutters at a duty rate of free, down from the general rate of 5%.
Scope and Application
The Tariff Concession Instrument No. 0901175 under the Customs Act 1901 applies to Kohki Pty Ltd, and more broadly to any entity seeking tariff concessions for specific goods imported into Australia. The instrument grants a tariff concession for certain annular cutters, reducing the duty rate from 5% to free, provided no substitutable goods are produced in Australia. The instrument's jurisdictional reach is national, as it falls under the Commonwealth's legislative authority. The application of the instrument is contingent upon the CEO of Customs being satisfied that no substitutable goods are produced domestically and that the application meets the core criteria outlined in the Act. The application process requires public consultation, inviting submissions from interested parties, though in this case, no submissions were received. The tariff concession does not impose any liabilities on any person and does not affect the rights of anyone as at the date of registration, while potentially benefiting importers by allowing them to apply for duty refunds on goods imported since the TCO's effective date. The Act allows for further extensions or restrictions through subordinate instruments, although the specific instrument in question does not detail such provisions.
Key Provisions
The Tariff Concession Instrument No. 0901175, made under section 269F of the Customs Act 1901, pertains to the application of a Tariff Concession Order (TCO) for certain annular cutters. According to the Act, the Chief Executive Officer of Customs (CEO) is responsible for determining whether an application for a TCO meets the core criteria (section 269C). If the CEO finds that the application is valid and no substitutable goods are produced in Australia (section 269D, 269E, and 269F), they must issue a written order declaring that the specified goods are subject to a lower rate of customs duty (section 269P(3)).
For the annular cutters in question, the TCO No. 0901175 specifies that these goods are to be subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty-free status, as opposed to the general rate of 5%. This concession came into effect on 15 January 2009, the day Kohki Pty Ltd submitted the application (subsection 269S(1)). It is important to note that this TCO does not affect the rights of any person other than the Commonwealth or impose any liabilities for actions taken before its registration. Instead, it potentially benefits importers by allowing them to apply for a refund of duties on goods imported since the effective date (paragraph 126(1)(r) of the Regulations).
The Act imposes several obligations on the CEO and applicants. The CEO must, as soon as practicable after accepting an application as valid, publish a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)). For the TCO in question, no submissions were received. Additionally, the CEO is required to ensure that the application does not pertain to goods specified in section 269SJ of the Act, which cannot be subject to a TCO, and must make a decision based on the core criteria outlined in section 269C.
Failing to comply with the requirements of the Customs Act 1901 and the associated regulations may result in civil or criminal penalties. Although the specific penalties are not detailed in the explanatory statement, breaches of customs regulations typically carry significant fines and potential imprisonment. The severity of penalties would depend on the nature and extent of the breach. The Act’s provisions, including those for TCOs, are designed to ensure compliance and maintain the integrity of the customs duty system in Australia.