EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0906062
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.
Dp World Holdings Limited applied for a TCO in respect of certain spreaders on 20 February 2009.
Instrument
TCO No 0906062 was made on 15 May 2009. It declares that those certain spreaders 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. 0906062 is taken to have come into force on 20 February 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, establishes a framework for the imposition and collection of customs duties and provides mechanisms for tariff concessions to be granted. The Act, through its Part XVA, allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can reduce or eliminate customs duties on specified goods. This was introduced to address the need for flexibility in tariff regulation, allowing for economic and policy considerations to be factored into duty assessments. The process requires an application to the CEO, who must determine if the application meets the core criteria, notably if no substitutable goods are produced in Australia. The policy objective behind this legislative scheme is to facilitate trade and economic efficiency by potentially lowering the cost of imported goods, provided certain conditions are met. Dp World Holdings Limited's application for a TCO on certain spreaders exemplifies this process, resulting in a significant reduction of duty from 5% to free, effective from the date of application.
Scope and Application
The Tariff Concession Instrument No. 0906062 under the Customs Act 1901 applies to entities seeking tariff concessions on certain goods, specifically certain spreaders in this case, by providing a lower rate of customs duty as stipulated in the Customs Tariff Act 1995. The instrument is targeted at the Chief Executive Officer of Customs, who is responsible for assessing applications for Tariff Concession Orders (TCOs) and making written orders when the application meets the core criteria. The legislation applies nationally across Australia, as it is a Commonwealth instrument. It is pertinent to note that the application of this Act is restricted to goods that are not specified in section 269SJ of the Customs Act 1901, which lists goods that cannot be subject to a TCO. The application process mandates the CEO to publish a notice in the Gazette to allow for public submissions; however, in this instance, no submissions were received. The TCO is effective from the date the application was lodged, which is 20 February 2009, and does not affect the rights of any person in respect of anything done or omitted before the registration date.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0906062 (the Instrument) pertain to the making of Tariff Concession Orders (TCOs) under section 269F of the Customs Act 1901. Section 269F allows for an application to be made to the Chief Executive Officer of Customs (the CEO) for a TCO. The CEO must assess the application against the core criteria outlined in section 269C, which stipulates that the application meets these criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Once the CEO is satisfied that the application meets the core criteria, a written TCO is made under section 269P(3), declaring the goods subject to a prescribed rate of duty specified in Schedule 4 to the Customs Tariff Act 1995.
The Instrument imposes several obligations and requirements on the parties it governs. Firstly, any person seeking a TCO must apply to the CEO in accordance with section 269F of the Act. The CEO is required to ensure that the application is not for goods specified in section 269SJ, which are ineligible for TCOs. Upon accepting the application as valid, the CEO must publish a notice in the Gazette under section 269K(1), inviting any interested parties to submit objections or reasons why the TCO should not be granted. In this case, no submissions were received in response to the published notice. Finally, once the CEO is satisfied that the application meets the core criteria, the CEO must make the TCO under section 269P(3).
Any breaches of the requirements or obligations under the Customs Act 1901 and the Customs Tariff Act 1995 can lead to various civil or criminal consequences. For instance, under section 271 of the Customs Act, an offence is committed if a person knowingly or recklessly makes a false statement or representation in an application for a TCO. This offence is punishable by a fine of up to 10,000 penalty units or imprisonment for up to five years, or both. Additionally, section 272 of the Act imposes penalties for fraudulent conduct related to customs matters, which may include fines of up to 22,200 penalty units or imprisonment for up to 15 years, or both, depending on the severity of the offence. These penalties underscore the importance of compliance with the statutory requirements and obligations set out in the Customs Act and related legislation.