EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0924291
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.
Xtek Pty Ltd applied for a TCO in respect of certain hand tool kits on 09 July 2009.
Instrument
TCO No 0924291 was made on 25 September 2009. It declares that those certain hand tool kits 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. 0924291 is taken to have come into force on 09 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 Tariff Concession Instrument No. 0924291, enacted under the Customs Act 1901, was introduced to provide a mechanism for the reduction of customs duty on certain imported goods, specifically hand tool kits in this instance. The instrument was made to address the need for tariff concessions where no substitutable goods are produced in Australia, thereby supporting importers by lowering their costs and potentially increasing the competitiveness of imported goods in the Australian market. The Australian Parliament enacted this instrument to ensure that tariff concessions could be applied fairly and efficiently, in line with the policy objectives of the Customs Act 1901. The Chief Executive Officer of Customs was mandated to assess applications for tariff concessions, ensuring they met the specified criteria before issuing a written order, thereby facilitating the process of reducing duty rates on qualifying goods.
Scope and Application
The Tariff Concession Instrument No. 0924291, established under Part XVA of the Customs Act 1901, applies to specific hand tool kits for which Xtek Pty Ltd submitted an application on 09 July 2009. The Act enables the Chief Executive Officer of Customs to grant tariff concession orders (TCOs) that lower the customs duty on eligible goods. The TCO No. 0924291 was issued on 25 September 2009, applying to certain hand tool kits, thereby exempting them from the general 5% customs duty rate and allowing them to be imported duty-free. This concession is contingent upon the CEO's determination that no substitutable goods were produced in Australia at the time of the application. The instrument has a national reach, affecting all importers of the specified goods within Australia. It does not apply to goods listed in section 269SJ of the Act, which are ineligible for tariff concessions. The TCO does not disadvantage any existing rights or impose liabilities on persons other than the Commonwealth, and it came into effect on the date the application was lodged, 09 July 2009. Subordinate instruments may further define the specifics of tariff concessions, but the primary focus remains on facilitating the import of goods that are not domestically produced.
Key Provisions
The Customs Act 1901, under Part XVA, outlines the process by which Tariff Concession Orders (TCO) can be issued by the Chief Executive Officer of Customs (CEO). These orders permit a lower rate of customs duty on certain goods, as specified in section 269F. If an application for a TCO is made and deemed eligible, a written order is issued by the CEO, as stipulated in section 269P(3), indicating that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. This is exemplified by Tariff Concession Instrument No. 0924291, which applies to specific hand tool kits, reducing their duty rate from 5% to free.
In terms of obligations, the CEO must ensure that a TCO application meets the core criteria, which includes verifying that no substitutable goods are produced in Australia on the date of application, as outlined in section 269C. Additionally, the CEO is required to publish a notice in the Gazette under subsection 269K(1), inviting any interested parties to submit reasons why the TCO should not be issued. This was done for TCO No. 0924291, although no submissions were received. The TCO itself does not retroactively affect any rights or impose liabilities on anyone, except as provided under the Regulations, such as the right of importers to apply for a refund of duty paid on imports since the TCO's effective date, as mentioned in paragraph 126(1)(r) of the Regulations.
Breaching the conditions set out in the Customs Act 1901 can lead to various civil and criminal consequences. Although the explanatory statement does not detail specific offences or penalties, the Act generally provides for a range of sanctions for non-compliance, including fines and imprisonment. The severity of the penalties would depend on the nature and extent of the breach, as well as any other relevant laws and regulations. For instance, falsely claiming eligibility for a TCO could lead to criminal charges under the Act, with potential penalties including substantial fines and imprisonment terms as prescribed by law.