EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0914982
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.
Biolab Pty Ltd applied for a TCO in respect of certain environmental chamber on 05 May 2009.
Instrument
TCO No 0914982 was made on 24 July 2009. It declares that those certain environmental chamber 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. 0914982 is taken to have come into force on 05 May 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, specifically introduced to provide a framework for tariff concession orders, was enacted to address the need for tariff reductions on specific goods. This was to support sectors such as manufacturing and technology by making imported goods more affordable and competitive. The Act empowers the Chief Executive Officer of Customs to establish these tariff concessions, ensuring that they are granted only when it is confirmed that no equivalent goods are produced domestically. The Tariff Concession Instrument No. 0914982, enacted in 2009, exemplifies this legislative intent by granting a concession on certain environmental chambers, reducing their duty from 5% to free, following a successful application by Biolab Pty Ltd. This measure was made possible as no substitutable goods were being produced in Australia at the time of application, aligning with the core criteria set out in the Customs Act. The instrument was published in the Gazette, inviting public submissions, none of which were received, leading to its enactment. This concession is intended to benefit importers by allowing them to apply for refunds on duties paid prior to the instrument's effective date, without imposing any new liabilities on non-Commonwealth entities.
Scope and Application
The Tariff Concession Instrument No. 0914982 applies to goods specified in the application, specifically certain environmental chambers in this case, and is governed by Part XVA of the Customs Act 1901. The Act applies to any person who applies for a Tariff Concession Order (TCO) in respect of goods, subject to the condition that the goods are not specified in section 269SJ of the Act, which lists those that cannot be subject to a TCO. The geographic reach of this legislation is national, as it pertains to the Customs Act 1901, which is a Commonwealth Act. The instrument affects the importation of goods by granting tariff concessions on specific items, such as the environmental chambers in this instance, and benefits importers by potentially reducing their duty liabilities. The CEO of Customs determines the eligibility of the application for a TCO based on the core criteria outlined in the Act, ensuring that the goods in question are not substitutable by Australian-produced goods. Any exclusions or exemptions would need to be identified in the application process, and there are no such exclusions mentioned for this particular TCO. The commencement of the TCO aligns with the date of the application, as stipulated in the Act.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0914982, made under the Customs Act 1901, are sections 269C, 269F, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods, provided that the goods are not specified in section 269SJ. Section 269C specifies the core criteria that must be met for a TCO application to be considered, which is that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods are subject to a specified item of Schedule 4 to the Customs Tariff Act 1995. Lastly, section 269S(1) states that a TCO is to be taken as having come into force on the day the application was lodged.
The Customs Act 1901 imposes several obligations on the CEO in relation to TCOs. Once an application is accepted as valid, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections to the TCO (subsection 269K(1)). This is to ensure transparency and provide an opportunity for stakeholders to voice any concerns. In this instance, the CEO did not receive any submissions in response to the invitation. Additionally, the Act requires that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and no new liabilities are imposed on such persons by virtue of the TCO.
Breaching the conditions set out in the Customs Act 1901 can lead to various civil and criminal consequences. While the explanatory statement does not detail specific offences or penalties for non-compliance with the TCO provisions, the Act generally provides for penalties for offences related to customs duties. For example, under section 251 of the Customs Act 1901, a person who knowingly or recklessly makes a false statement or representation in connection with customs duties is liable to a penalty of up to 10,000 penalty units, which equates to approximately AUD 1.85 million as of 2023. Further, section 252 imposes penalties for offences involving the importation or exportation of dutiable goods without payment of duty, with penalties including fines and imprisonment. The explanatory statement does not specify any maximum penalties for breaches related specifically to TCOs, but it is reasonable to assume that similar penalties could apply where relevant provisions are contravened.