EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0908814
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.
Gunnebo Australia applied for a TCO in respect of certain pedestrian entrance gates on 16 March 2009.
Instrument
TCO No 0908814 was made on 29 May 2009. It declares that those certain pedestrian entrance gates 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. 0908814 is taken to have come into force on 16 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, enacted by the Australian Parliament, establishes the framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. These orders allow for a lower rate of customs duty on specified goods, provided the application meets certain criteria. The act aims to facilitate smoother trade by reducing tariffs on goods that are not produced domestically or are not readily substitutable by Australian-made products. This concession mechanism is intended to benefit importers by lowering their costs and potentially increasing the competitiveness of these imported goods in the Australian market. The 2009 Tariff Concession Instrument No. 0908814, for example, was introduced to provide a tariff concession for certain pedestrian entrance gates, reducing their duty rate from 5% to free, effective from the date of the application, 16 March 2009.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCOs), applies to individuals and entities seeking tariff concessions for specific goods, which in this case are certain pedestrian entrance gates. These orders are applicable nationwide and are managed by the Chief Executive Officer of Customs, who is responsible for assessing and approving applications in accordance with the criteria outlined in the Act. The geographic reach of this legislation is national, as it pertains to the customs duties across Australia. Exclusions are made for goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The process involves an application being lodged, assessed for core criteria satisfaction, and, if approved, a written order is issued that applies a lower rate of customs duty or makes the duty free, as determined by the CEO. This instrument, TCO No. 0908814, came into effect on 16 March 2009, the date the application was lodged, and it does not disadvantage any person or impose new liabilities, though it does entitle importers to a refund of duty for goods imported since the TCO's effective date.
Key Provisions
The Customs Act 1901, specifically Part XVA, governs the establishment of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs (CEO) may reduce customs duty rates on certain goods (section 269F). A TCO application is made by an individual to the CEO, and if the application is deemed valid and meets the core criteria, a TCO is issued (sections 269C and 269P(3)). The core criteria require that on the date of application, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). The definitions for "goods produced in Australia," "ordinary course of business," and "substitutable goods" are detailed in sections 269D, 269E, and 269F respectively. In Gunnebo Australia's case, the CEO was satisfied that no substitutable goods were produced in Australia for the pedestrian entrance gates they applied for, leading to the issuance of TCO No. 0908814 on 29 May 2009, which reduced the duty rate for these goods from 5% to free.
The Act imposes several obligations on the parties involved. The CEO must ensure that applications for TCOs are valid and meet the core criteria before issuing an order (section 269F). Additionally, the CEO is required to publish a notice in the Gazette, inviting submissions from any interested parties who may have reasons against the TCO's issuance (subsection 269K(1)). The TCOs are to be considered effective from the date the application was lodged (subsection 269S(1)). In this instance, TCO No. 0908814 is effective from 16 March 2009, the date Gunnebo Australia applied. Moreover, the TCO does not disadvantage any person or impose liabilities on any person in respect of actions taken before the TCO's registration, but it does benefit importers who can apply for duty refunds for goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations).
The Customs Act 1901 does not explicitly outline specific offences or penalties for breaches related to the issuance or misuse of TCOs. However, any misuse of the concessions granted by a TCO might still be subject to the broader provisions of the Act, which could entail criminal or civil penalties. For example, fraudulent claims for duty refunds or other customs-related offences might lead to prosecution under other sections of the Customs Act, potentially resulting in significant fines or imprisonment. It is important to note that while the explanatory statement does not specify maximum penalties, any legal action arising from misuse of the concessions would be assessed based on the specific nature of the breach and the relevant provisions of the Customs Act and associated regulations.