EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0907854
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.
Fuchs Lubricants applied for a TCO in respect of certain grease filling line on 06 March 2009.
Instrument
TCO No 0907854 was made on 29 May 2009. It declares that those certain grease filling line 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. 0907854 is taken to have come into force on 06 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 was amended by Tariff Concession Instrument No. 0907854, which was enacted on 29 May 2009, to provide a solution for Fuchs Lubricants' application for tariff concessions on certain grease filling lines. This instrument was introduced to address the need for a lower rate of customs duty on specified goods, which are not produced in Australia and for which there are no substitutable goods. Enacted by the Chief Executive Officer of Customs under section 269F of the Customs Act, the policy objective of this instrument is to support the import of goods that are not domestically produced, thereby facilitating trade and potentially reducing costs for businesses that rely on these imports.
The Tariff Concession Order (TCO) No. 0907854 specifies that the grease filling lines in question are subject to a free rate of duty, down from the general rate of 5%, effective from the date of the application, 6 March 2009. This decision was made after no objections were raised in response to the public notice published in the Gazette. Importantly, the TCO does not retroactively affect the rights of any person or impose new liabilities, ensuring that only future imports benefit from the reduced duty rate. Importers can also apply for duty refunds on imports since the effective date of the TCO, enhancing the instrument's utility for businesses involved in these imports.
Scope and Application
The Tariff Concession Instrument No. 0907854 under the Customs Act 1901 applies to the specific grease filling line as applied for by Fuchs Lubricants. The Act allows for the Chief Executive Officer of Customs to make Tariff Concession Orders, which provide a lower rate of customs duty on goods specified in the order. This instrument was made on 29 May 2009, following an application by Fuchs Lubricants on 06 March 2009, and it came into effect on the date the application was lodged. The instrument applies nationally, as per the Commonwealth jurisdiction of the Customs Act. The CEO determined that no substitutable goods were produced in Australia at the time the application was made, satisfying the core criteria set out in the Act. This concession results in the affected goods being subject to a free rate of duty, down from the general rate of 5%. The instrument does not disadvantage any person other than the Commonwealth and does not impose any new liabilities, while allowing eligible importers to apply for a refund of duties paid on imports since the effective date of the concession.
Key Provisions
The Customs Act 1901, specifically through Part XVA, outlines the process for applying for and granting Tariff Concession Orders (TCOs) (sections 269C, 269F, 269K). An application for a TCO can be made by any person to the Chief Executive Officer (CEO) of Customs. If the application is deemed valid and meets the core criteria outlined in section 269C, the CEO must issue a TCO. This order allows for a lower rate of customs duty to be applied to the specified goods. Fuchs Lubricants, for instance, applied for and received a TCO for certain grease filling lines on 6 March 2009, which took effect on the same date. The TCO granted by Instrument TCO No. 0907854 specifies that these particular grease filling lines are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a duty-free status for these goods.
The obligations imposed on parties by the Act are primarily directed at the CEO of Customs. Once an application is deemed valid, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections to the granting of the TCO (subsection 269K(1)). If no submissions are received, the CEO must proceed to issue the TCO. Additionally, the Act mandates that the TCO does not affect any existing rights or impose liabilities on any person for actions taken before the TCO's effective date. Importers of the goods affected by the TCO may apply for a refund of any duty paid on those goods since the TCO's effective date.
Failure to comply with the requirements of the Customs Act 1901 can result in both civil and criminal consequences. Under the Act, non-compliance with the conditions of a TCO could lead to penalties. The maximum penalties for breaches of customs laws are significant, with potential fines and imprisonment depending on the severity of the offence. For instance, serious offences may attract fines of up to $220,000 for corporations and $44,000 for individuals, along with imprisonment for up to five years. These penalties underscore the importance of adhering to the provisions of the Act and the TCOs issued under it.