EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0918145
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.
Donhad Pty Limited applied for a TCO in respect of certain lock nuts nylon insert on 28 May 2009.
Instrument
TCO No 0918145 was made on 21 August 2009. It declares that those certain lock nuts nylon insert 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. 0918145 is taken to have come into force on 28 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, establishes a framework for the application of customs duties and provides for tariff concession orders (TCOs) that can reduce the duty payable on certain goods. The Tariff Concession Instrument No. 0918145 was introduced to address the need for a tariff concession for specific lock nuts nylon insert, enabling a more competitive market for these goods within Australia. This instrument was made under the authority of the Chief Executive Officer of Customs, who assessed the application from Donhad Pty Limited and determined that the concession was warranted as no substitutable goods were produced in Australia. The TCO, which came into effect on the date the application was lodged, grants a zero rate of duty on the specified goods, down from the general rate of 5%, and does not impose any new liabilities or disadvantage any existing rights of non-Commonwealth entities.
Scope and Application
The Customs Act 1901, through Part XVA, establishes a scheme under which Tariff Concession Orders (TCOs) may be issued by the Chief Executive Officer of Customs (CEO) to apply a lower rate of customs duty on specified goods. This scheme is applicable to any person who applies to the CEO for a TCO in respect of goods, provided that the goods are not those specified in section 269SJ, which are ineligible for TCOs. The CEO assesses the application against the core criteria outlined in section 269C, ensuring that no substitutable goods are produced in Australia in the ordinary course of business as defined by sections 269D and 269E. If the application meets these criteria, a TCO is issued under section 269P(3), granting a reduced customs duty rate on the specified goods as outlined in Schedule 4 to the Customs Tariff Act 1995. The CEO is mandated by section 269K(1) to publish a notice inviting submissions regarding the TCO application, although in this case, no submissions were received. The TCO becomes effective from the date the application was lodged, as per section 269S(1), and it does not affect any existing rights or impose new liabilities on persons other than the Commonwealth.
Key Provisions
The key operative sections of this legislation are sections 269C, 269B, 269D, 269E, and 269P of the Customs Act 1901. Section 269C establishes the core criteria that an application for a Tariff Concession Order (TCO) must meet, which primarily revolves around the absence of substitutable goods produced in Australia at the time the application is made. Section 269B provides definitions for terms such as 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods', which are critical for determining the eligibility of goods for a TCO. Section 269D further defines 'goods produced in Australia', while section 269E explains 'ordinary course of business'. Finally, section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets the core criteria, they must issue a written TCO.
The obligations imposed by the Act on parties and entities governed by it include ensuring that the application for a TCO is made in accordance with the criteria specified in section 269C. This involves demonstrating that no substitutable goods are produced in Australia at the time of application. Additionally, the CEO is required to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who considers there are reasons why the TCO should not be made to lodge a submission. In this case, the CEO did not receive any submissions, indicating that the application met the necessary requirements.
The Act also outlines consequences for breaches, although specific offences and penalties are not detailed in this particular legislation. Generally, under Australian law, breaches of the Customs Act can result in significant civil and criminal penalties. Civil penalties can include fines, and in severe cases, criminal penalties may apply, which could lead to imprisonment. The exact penalties would depend on the specific nature of the breach and other relevant laws.
In this context, since TCO No. 0918145 was issued for certain lock nuts nylon insert, it is important that the relevant parties comply with the terms and conditions of this order. The TCO specifies that the goods in question are subject to a duty rate of free, a significant reduction from the general rate of 5%. This concession is effective from the date the application was lodged, 28 May 2009, and importers can apply for a refund of duty on goods imported since this date under the relevant regulations.