EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0920578
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.
Power Fasteners applied for a TCO in respect of certain polyurethane expanding foam on 17 June 2009.
Instrument
TCO No 0920578 was made on 14 September2009. It declares that those certain polyurethane expanding foam 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. 0920578 is taken to have come into force on 17 June 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 Tariff Concession Instrument No. 0920578, enacted in 2009, is a legislative instrument under the Customs Act 1901 designed to facilitate the reduction or elimination of customs duties on specific goods, thereby addressing a gap in the duty-reduction mechanism for imported goods. The instrument was introduced to provide tariff concessions on certain polyurethane expanding foam, where it was determined that no substitutable goods were being produced in Australia at the time. The policy objective is to encourage the import of goods that are not domestically produced, potentially stimulating market competition and benefiting consumers through lower prices. The Customs Act 1901, enacted by the Australian Parliament, establishes the framework within which these tariff concessions are applied. The instrument was made by the Chief Executive Officer of Customs, who assessed and accepted an application from Power Fasteners, ensuring the concessions do not disadvantage existing rights or impose new liabilities.
Scope and Application
The Customs Act 1901 applies to the Tariff Concession Orders (TCOs) regime, which provides for a lower rate of customs duty on specified goods. This regime applies to any person or entity that applies for a TCO in respect of goods, subject to the conditions and criteria set out in the Act. The scope of this Act extends to all goods that are not specified in section 269SJ, which sets out those goods that cannot be subject to a TCO. The Act applies on a national level as it is a Commonwealth legislation. The Act allows for the creation of TCOs through subordinate instruments, enabling the application of varying tariff concessions based on the specific circumstances of the goods in question. Importantly, the Act ensures that the implementation of a TCO does not disadvantage or impose liabilities on any person other than the Commonwealth, for actions taken prior to the TCO’s registration. Instead, the rights of importers are beneficially affected, with provisions for duty refunds on goods imported since the effective date of the TCO.
Key Provisions
The main operative sections of this legislation establish the framework for the creation and enforcement of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). Section 269C specifies that a TCO application meets core criteria if, on the day of application, no substitutable goods are produced in Australia in the ordinary course of business. This means that if an applicant demonstrates that the goods in question are not currently produced domestically in a manner that could substitute for the imported goods, a TCO may be granted. Section 269P(3) then mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, they must issue a written order declaring that the goods are subject to the specified tariff concession. The instrument in question, TCO No. 0920578, declares that certain polyurethane expanding foam is subject to a free rate of duty, previously charged at 5%.
The obligations imposed by this Act on parties primarily concern the CEO of Customs, who must evaluate TCO applications against the criteria set out in section 269C. This includes determining whether substitutable goods are being produced in Australia and ensuring that the application aligns with the specified conditions. Additionally, the CEO is required to publish a notice in the Gazette (subsection 269K(1)) inviting any interested parties to submit objections to the TCO application. In this case, no objections were received. The Act also mandates that the TCO comes into force on the date the application was lodged, ensuring that the concession applies retroactively to that date, as specified in subsection 269S(1).
In terms of offences, penalties, or civil/criminal consequences for breach, the Act does not explicitly outline specific penalties for non-compliance with the TCO provisions. However, any misuse or fraudulent claims related to TCOs may be subject to broader penalties under the Customs Act 1901 or other relevant legislation. For instance, misrepresentation of facts to obtain a TCO could potentially lead to penalties under general fraud or customs-related offences, which could include fines or imprisonment, depending on the severity and intent of the breach. The precise nature and extent of penalties would be determined in the context of broader legal proceedings and the specific circumstances of any alleged breach.