EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0916935
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.
Hilti Australia applied for a TCO in respect of certain double threaded drive nuts on 19 May 2009.
Instrument
TCO No 0916935 was made on 07 August 2009. It declares that those certain double threaded drive nuts 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. 0916935 is taken to have come into force on 19 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, enacted by the Parliament of Australia, addresses the issue of providing tariff concessions for certain imported goods under specific conditions. This legislation allows for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs, which can reduce the rate of customs duty on goods not produced in Australia and for which no substitutable goods are produced domestically. The policy objective is to encourage the importation of goods that are not manufactured in Australia by reducing the customs duty on them, thereby making such goods more competitively priced and accessible. The Explanatory Statement for Tariff Concession Instrument No. 0916935, made on 7 August 2009, exemplifies this process by granting tariff concessions for certain double threaded drive nuts, setting their duty rate to free, and taking effect from the date the application was lodged, 19 May 2009.
Scope and Application
The Tariff Concession Instrument No. 0916935 under the Customs Act 1901 applies to specific goods, namely certain double threaded drive nuts, and provides for a tariff concession order (TCO) made by the Chief Executive Officer of Customs. This instrument is applicable to entities or individuals involved in the importation of these goods, providing them with a lower rate of customs duty as specified in the instrument. The concession is applicable nationally, as per the jurisdictional reach of the Customs Act, which operates throughout Australia. The instrument excludes any goods that are specified under section 269SJ of the Act, which outlines the goods that cannot be subject to a TCO. Additionally, the instrument itself does not impose any liabilities or disadvantage any person's rights as they stood prior to its registration. The application of this instrument can be extended or further defined through subordinate instruments or regulations, such as those detailed in the Customs Tariff Act 1995.
Key Provisions
The Customs Act 1901, particularly Part XVA, introduces the scheme for Tariff Concession Orders (TCOs), as outlined in sections 269C, 269F, 269SJ, 269D, and 269E. A TCO allows for a lower rate of customs duty on specified goods, provided the Chief Executive Officer (CEO) of Customs determines that the application meets the core criteria. Specifically, section 269C stipulates that the application must demonstrate that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. This requirement is essential for the CEO to decide whether to proceed with the TCO. For instance, in the case of Hilti Australia’s application for double threaded drive nuts, the CEO determined that no substitutable goods were produced in Australia, resulting in the issuance of TCO No. 0916935 on 7 August 2009. This order declared that the specified nuts would be subject to a zero duty rate, as opposed to the general rate of 5%.
The obligations imposed by the Act on parties applying for a TCO are straightforward yet critical. Firstly, applicants must ensure their applications meet the core criteria as per section 269C, which involves proving the absence of substitutable goods in Australia. Additionally, section 269K(1) mandates that the CEO must publish a notice in the Gazette inviting public submissions on the proposed TCO. This transparency measure ensures that all stakeholders have an opportunity to voice any objections or concerns before the CEO makes a final decision. The CEO, in this case, Hilti Australia, did not receive any submissions regarding the application for the double threaded drive nuts, facilitating the swift issuance of the TCO.
In terms of enforcement and consequences, the Act does not explicitly outline specific offences, penalties, or civil/criminal consequences for breaches directly related to TCOs. However, the overarching framework of the Customs Act 1901 provides a basis for potential enforcement actions. Any misstatements or fraudulent applications could be subject to penalties under general customs laws, which may include fines or imprisonment. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, as detailed in section 269S(1). For example, the TCO does not impose any liabilities on importers or other entities for actions taken before the TCO’s effective date. This protective measure ensures that importers of affected goods can apply for duty refunds from the date the TCO is deemed to have come into force, as permitted under paragraph 126(1)(r) of the Regulations.