EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0907331
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.
Linatex Australia applied for a TCO in respect of certain valve sleeves parts on 03 March 2009.
Instrument
TCO No 0907331 was made on 22 May 2009. It declares that those certain valve sleeves parts 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. 0907331 is taken to have come into force on 03 March 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, as amended, provides a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. Enacted by the Parliament of Australia, this Act aims to facilitate the import of goods by reducing or eliminating customs duty under certain conditions. The Act's Part XVA specifically outlines the process through which businesses can apply for tariff concessions for goods not produced in Australia. The primary policy objective is to support Australian industries by ensuring that tariff concessions are granted only when no substitutable goods are produced domestically, thereby protecting local production and fostering economic growth. This legislative approach helps to balance the interests of importers and local manufacturers, ensuring that tariff concessions are both fair and economically beneficial.
Scope and Application
The Customs Act 1901, through Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This Act applies to any person or entity that wishes to apply for a TCO for goods not specified in section 269SJ of the Act, which lists goods ineligible for such concessions. The application process requires the CEO to assess whether the goods in question are substitutable by any goods produced in Australia in the ordinary course of business, as defined in sections 269D and 269E of the Act. If no such substitutable goods exist, the CEO is mandated to issue a TCO, granting a lower rate of customs duty on the specified goods. This process was exemplified by Tariff Concession Instrument No. 0907331, which was issued on 22 May 2009 for certain valve sleeves parts, effectively reducing their duty rate from 5% to free. The TCO’s application is national in scope, impacting all entities involved in the importation of these goods within Australia. The CEO is also required to publish notices in the Gazette to allow public submissions on TCO applications, though no submissions were received for this particular case. The TCO took effect from 03 March 2009, the date of application, and does not affect any pre-existing rights or liabilities, providing a refund option for importers under the Customs Regulations.
Key Provisions
The main operative sections of the Customs Act 1901, particularly in relation to Tariff Concession Orders (TCOs), include section 269C, which stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (s 269C). Section 269F provides the process by which a person can apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods (s 269F). Section 269P(3) requires the CEO to make a written order (a TCO) if satisfied that the application meets the core criteria (s 269P(3)). This TCO declares that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thereby reducing the rate of duty on these goods (s 269P(3)). The TCO in question, Tariff Concession Instrument No. 0907331, was made on 22 May 2009, declaring that certain valve sleeves parts are subject to item 50 of Schedule 4 to the Tariff, with the general rate of duty on these goods being reduced from 5% to free (s 269P(3)).
The Act imposes specific obligations and requirements on both the CEO and applicants for a TCO. For the CEO, these include ensuring that any application for a TCO is not in respect of goods specified in section 269SJ, which lists goods that cannot be subject to a TCO (s 269SJ). The CEO must also determine whether the application meets the core criteria by confirming that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (s 269C). Furthermore, the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes there are reasons why the TCO should not be made to lodge a submission (s 269K(1)). In the case of applicants, they must ensure that their application complies with the criteria set out in the Act, particularly that no substitutable goods are being produced in Australia at the time of application (s 269C).
Breaches of the provisions of the Customs Act 1901 may result in various civil or criminal consequences. However, the explanatory statement for Tariff Concession Instrument No. 0907331 does not specify particular offences, penalties, or consequences for non-compliance with the TCO process itself. The penalties for breaches of the Customs Act 1901 generally can include fines and imprisonment, depending on the nature and severity of the breach. For instance, section 258 of the Act provides for a penalty of up to 10,000 penalty units or imprisonment for up to 10 years, or both, for serious breaches involving fraud or evasion of customs duty. The specific penalties applicable to non-compliance with a TCO would need to be referred to the broader provisions of the Customs Act 1901 and related regulations.