EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0910417
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.
Techticonic Industries applied for a TCO in respect of certain drywall axe on 25 March 2009.
Instrument
TCO No 0910417 was made on 19 June 2009. It declares that those certain drywall axe 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. 0910417 is taken to have come into force on 25 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, addresses the need for tariff concessions to promote fair trade and economic efficiency. Specifically, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can lower the rate of customs duty on certain goods. This legislative framework was introduced to ensure that Australian consumers and businesses can access goods at reduced duty rates when there are no domestically produced alternatives. Instrument TCO No. 0910417, issued on 19 June 2009, exemplifies this process by applying a zero duty rate to certain drywall axes, effective from 25 March 2009, the date the application was lodged. The policy objective here is to facilitate the import of these goods without imposing undue burdens or liabilities on importers or other stakeholders.
Scope and Application
The Tariff Concession Instrument No. 0910417 is an instrument under Part XVA of the Customs Act 1901, which facilitates the application of tariff concessions on specific goods, thereby reducing or eliminating the customs duty on those goods. This instrument applies to entities or individuals seeking a tariff concession order (TCO) for goods, provided that such goods are not specified in section 269SJ of the Act as ineligible for a TCO and that the application meets the core criteria outlined in section 269C. The instrument is particularly relevant to the import and export industry, as it directly affects the duty rates on specified goods, in this case, certain drywall axes. The geographic reach of this Act is national, as it pertains to the Commonwealth of Australia and its customs regulations.
The instrument was made on 19 June 2009, following an application by Techticonic Industries on 25 March 2009. The application was assessed by the Chief Executive Officer of Customs (CEO), who determined that no substitutable goods were produced in Australia at the time of the application, thereby satisfying the core criteria for a TCO. The CEO's decision was made without any submissions from the public, as no objections were lodged in response to the notice published in the Gazette. The TCO has a retroactive effect from the date of the application, meaning that it applies to transactions from 25 March 2009 onwards, although it does not disadvantage any existing rights or impose liabilities for actions taken prior to the registration date. Importers of the specified goods can benefit from this concession by applying for a refund of duty paid on goods imported since the effective date of the TCO.
Key Provisions
The Customs Act 1901 (the Act) allows for the creation of Tariff Concession Orders (TCOs) through Part XVA (section 269F). When an individual or entity applies for a TCO in respect of specific goods, the Chief Executive Officer of Customs (the CEO) must assess whether the application meets the core criteria set out in the Act (section 269C). A key requirement is that on the day the application is lodged, no substitutable goods, which are goods produced in Australia that can be used in the same way as the goods in question, should be produced in the ordinary course of business (sections 269D and 269E). If the CEO is satisfied that the application meets these criteria, they must make a written order, declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) (section 269P(3)). In the case of Techticonic Industries' application for a TCO in respect of certain drywall axes, the CEO determined that the application met the criteria and issued TCO No. 0910417, which specifies that these goods are subject to item 50 of Schedule 4 to the Tariff, with a duty rate of free, instead of the general rate of 5%.
The Act imposes specific obligations on both the CEO and applicants for a TCO. The CEO is required to publish a notice in the Gazette, inviting any interested party to submit reasons why the TCO should not be made (subsection 269K(1)). The CEO must also ensure that the application does not pertain to goods specified in section 269SJ of the Act, which are ineligible for a TCO. Techticonic Industries must have ensured that their application for the drywall axes met all the specified criteria, including the absence of substitutable goods produced in Australia at the time of application.
Failure to comply with the requirements of the Act or the TCO may result in civil or criminal consequences. While the Explanatory Statement does not detail specific offences or penalties, breaches of the Customs Act 1901 can generally lead to substantial fines and, in severe cases, imprisonment. The penalties for non-compliance are outlined in other sections of the Act and related legislation, but the focus here is on ensuring that applications for TCOs are properly assessed and that the rights of all parties are protected under the law. The TCO No. 0910417 ensures that Techticonic Industries, and potentially other importers, can benefit from the reduced duty rate on the specified drywall axes, provided they comply with the terms of the order.