EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0902829
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.
Dept Of Defence applied for a TCO in respect of certain mine clearance system on 29 January 2009.
Instrument
TCO No 0902829 was made on 24 April 2009. It declares that those certain mine clearance system 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. 0902829 is taken to have come into force on 29 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, specifically amended through Tariff Concession Instrument No. 0902829 in 2009, was enacted to address the need for tariff concessions that could encourage the import of specific goods by reducing the customs duty rate. This legislation was introduced to streamline the process through which businesses and government entities could apply for a lower customs duty on goods that are not produced domestically, thereby promoting economic efficiency and facilitating the acquisition of specialised goods. The instrument was established under the authority of the Chief Executive Officer of Customs, who is mandated to evaluate applications against the core criteria outlined in the Act. The objective of this legislative measure is to ensure that essential goods, which are not domestically manufactured, can be imported at a reduced tariff, thereby benefiting both the importing businesses and the broader economy.
The instrument was enacted following an application by the Department of Defence for a tariff concession on certain mine clearance systems, which led to the issuance of Tariff Concession Order No. 0902829. The order, effective from 29 January 2009, granted a tariff concession on these systems, reducing the duty from the general rate of 5% to free, thus facilitating the acquisition of critical equipment without the burden of high customs duties. The process involved a public consultation period where no objections were raised, indicating broad support for the concession. The tariff concession does not retroactively affect the rights of any person and provides for potential duty refunds for importers, further ensuring that the benefits of the concession are realised without imposing any additional liabilities.
Scope and Application
The Customs Act 1901, through its Part XVA, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). This scheme allows for the application of a reduced rate of customs duty on goods that are the subject of a TCO. This particular legislation applies to any individual or entity that meets the core criteria outlined in the Act for a TCO, specifically when no substitutable goods are produced in Australia in the ordinary course of business. The geographic reach of this Act is national, as it applies across the Commonwealth of Australia. The Act allows for the CEO to make subordinate instruments that extend or restrict the application of a TCO, as seen in TCO No. 0902829 made on 24 April 2009 for certain mine clearance systems, which was declared to be free of duty under the Customs Tariff Act 1995. The TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 0902829 include sections 269C, 269B, 269D, 269E, and 269P of the Customs Act 1901. Section 269C sets out the core criteria that must be met for a Tariff Concession Order (TCO) application to be approved. It mandates that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269B defines the terms 'goods produced in Australia', 'ordinary course of business', and'substitutable goods', which are critical for assessing the validity of a TCO application. Section 269D provides the definition for 'goods produced in Australia', section 269E defines 'ordinary course of business', and section 269P outlines the process for the CEO to make a written TCO if the application meets the core criteria.
The Act imposes several obligations on the parties involved in the TCO process. Firstly, applicants, such as the Department of Defence, must ensure their applications meet the core criteria outlined in section 269C. This involves demonstrating that no substitutable goods were produced in Australia in the ordinary course of business. The CEO is required to review the application and decide whether it meets the criteria, as specified in section 269P. If satisfied, the CEO must make a TCO, as outlined in section 269P(3). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, in accordance with subsection 269K(1).
Failure to comply with the requirements set out in the Customs Act 1901 can lead to various civil and criminal consequences. While the Act does not explicitly state penalties for non-compliance with the TCO process, breaches of other sections of the Customs Act 1901 can result in significant penalties. For example, subsection 237A(1) of the Customs Act 1901 states that a person who knowingly or recklessly makes a false or misleading statement in a document that is required to be furnished under the Act can be fined up to 10,000 penalty units or imprisonment for five years, or both. Similarly, subsection 240B(1) of the Act imposes a fine of up to 10,000 penalty units or imprisonment for five years, or both, for customs fraud. These penalties underscore the importance of adhering to the legislative requirements governing the TCO process.