EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0924093
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.
Ed Oates Pty Ltd applied for a TCO in respect of certain caution floor signs on 08 July 2009.
Instrument
TCO No 0924093 was made on 25 September 2009. It declares that those certain caution floor signs 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. 0924093 is taken to have come into force on 08 July 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, provides a framework for administering customs and excise duties, including the ability to grant tariff concessions. This Act aims to facilitate trade by allowing for reduced customs duty rates on certain goods, thereby addressing economic inefficiencies and promoting fair competition. Specifically, the Act allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) under Part XVA, which can lower the duty rate for specific goods if no substitutable goods are produced in Australia. The instrument F2010L00393 (Tariff Concession Instrument No. 0924093), issued on 25 September 2009, is an example of this mechanism in action. It was introduced in response to an application by Ed Oates Pty Ltd for tariff concessions on certain caution floor signs, which were determined to have no substitutable Australian-produced goods, thus qualifying for a tariff reduction from 5% to free. This instrument ensures that no existing rights or liabilities of non-Commonwealth entities are adversely affected, while providing potential benefits to importers who may apply for duty refunds on goods imported since the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders, when made, apply a reduced rate of customs duty to specified goods. The Act allows an individual or entity to apply for a TCO, provided the goods in question are not excluded under section 269SJ. The CEO assesses applications against the criteria set out in section 269C, which stipulates that no substitutable goods should be produced in Australia in the ordinary course of business on the day the application is lodged. The application process also involves determining the definitions of terms such as 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods', as outlined in sections 269D, 269E, and 269B respectively. If the application satisfies these criteria, the CEO issues a written TCO, declaring the applicable customs duty rate for the specified goods. This process was exemplified in the case of Ed Oates Pty Ltd, which successfully applied for a TCO for certain caution floor signs, resulting in a duty rate of free, as opposed to the general rate of 5%.
The scope of this legislation is broad, applying to any person or entity that imports goods potentially eligible for a TCO. The application of TCOs is national, as it is governed under the Commonwealth Customs Act 1901. However, the application of TCOs is restricted to goods that are not specified in section 269SJ of the Act. The instrument may extend its application through subordinate regulations, which provide further detail on the process and criteria for TCOs. The Act ensures that the rights of importers are positively affected, allowing them to apply for duty refunds on goods imported since the TCO came into effect, without imposing new liabilities on any person.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0924093 include section 269F (269F), which allows an individual or entity to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of goods. Section 269C (269C) outlines the core criteria for a TCO, which must be met for the CEO to grant the order. This includes the requirement that, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. If these conditions are satisfied, the CEO must make a written order (a TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (269P(3)).
The obligations imposed by this Act on the parties it governs include the requirement for the CEO to assess whether an application meets the core criteria for a TCO. This involves determining whether the goods are substitutable and whether they were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, a TCO must be issued. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties who may have reasons why the TCO should not be made.
The consequences for non-compliance with the provisions of the Act are not explicitly stated in the explanatory statement, but typically, failure to comply with the requirements of a TCO could result in the goods being subject to the general rate of duty rather than the concessional rate. This could potentially lead to increased costs for importers and could also have broader implications for the Australian economy if it results in the importation of goods that could otherwise be produced domestically.
Given that the Act does not specify any particular penalties for breach, it is likely that the consequences would be determined by the specific circumstances of the case and would be dealt with under the broader provisions of the Customs Act 1901 and any related legislation. However, it is important to note that the explanatory statement does not provide any information on the maximum penalties that could be imposed for breach.
In summary, the Tariff Concession Instrument No. 0924093 sets out a scheme under which Tariff Concession Orders can be made by the CEO of Customs. These orders allow for a lower rate of customs duty to be applied to certain goods, provided that they meet the core criteria outlined in the Act. The CEO is required to assess applications for TCOs and publish notices in the Gazette inviting submissions from interested parties. While the explanatory statement does not provide specific information on the penalties for non-compliance, it is likely that the consequences would be determined by the specific circumstances of the case and would be dealt with under the broader provisions of the Customs Act 1901 and any related legislation.