EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0908469
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 kettles on 12 March 2009.
Instrument
TCO No 0908469 was made on 29 May 2009. It declares that those certain grease kettles 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. 0908469 is taken to have come into force on 12 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 Tariff Concession Instrument No. 0908469 was enacted in 2009 under the Customs Act 1901 to address the issue of customs duty rates for specific imported goods, in this case, certain grease kettles. The instrument was created in response to an application by Fuchs Lubricants, seeking a tariff concession order (TCO) for these goods. The Customs Act 1901 provides for TCOs, which allow for a lower rate of customs duty on goods not produced in Australia in the ordinary course of business, thereby promoting fair trade practices. The instrument was enacted by the Chief Executive Officer of Customs following a determination that no substitutable goods were produced in Australia, meeting the core criteria as stipulated in section 269C of the Act. The policy objective is to ensure that Australian importers are not disadvantaged and can benefit from reduced duty rates on imported goods, which aligns with the broader goal of facilitating trade and economic growth.
Scope and Application
The Customs Act 1901, through the Tariff Concession Orders (TCO) scheme, applies to individuals or entities seeking to import goods into Australia by providing for reduced customs duty rates on specified items. The scope of the Act extends to any goods that are the subject of a TCO application, provided they are not excluded under section 269SJ of the Act, which details goods that cannot be subject to a TCO. The geographic reach of the Act is national, as it applies across all states and territories of Australia, and is administered by the Chief Executive Officer of Customs. The Act's application is further refined by the Customs Tariff Act 1995, which specifies the rates of duty. In the case of TCO No. 0908469, the CEO determined that certain grease kettles qualify for a concession, resulting in a reduction from the general duty rate of 5% to a rate of duty that is free, contingent upon the absence of substitutable goods produced in Australia. The application of the TCO does not retroactively affect the rights of any person, ensuring that it does not disadvantage or impose liabilities on individuals or entities for actions taken prior to the order's effective date.
Key Provisions
The primary operative sections of this legislation pertain to the process and criteria for granting Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). Specifically, section 269C dictates that a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. Moreover, section 269D defines 'goods produced in Australia', section 269E defines 'ordinary course of business', and section 269F outlines 'substitutable goods'. If these criteria are met, the Chief Executive Officer of Customs (CEO) must issue a written order (section 269P(3)) specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 applicable to the goods. In this case, the TCO declared that certain grease kettles are subject to item 50 of Schedule 4, with a duty rate of 0% instead of the general rate of 5%.
The Act imposes several obligations on parties involved. The CEO must ensure that the TCO application does not pertain to goods specified in section 269SJ, which are ineligible for a TCO. Additionally, under section 269K(1), the CEO is required to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted. In this instance, no submissions were received. Furthermore, the CEO must verify that the application meets the core criteria outlined in section 269C, which was satisfied for this particular TCO.
Failure to comply with the provisions of the Customs Act 1901 may result in various consequences. While the specific Act does not detail penalties for non-compliance with TCO regulations, breaches of customs laws generally can lead to civil or criminal penalties. Civil penalties may include fines up to the maximum prescribed by law, while criminal penalties can result in imprisonment. For instance, section 278 of the Customs Act 1901 imposes penalties for offences such as smuggling or providing false information, with maximum fines and imprisonment terms varying based on the severity of the offence. Importers and other affected parties should be aware of these potential repercussions to ensure compliance with the Act and its associated regulations.