EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0929225
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.
Rio Tinto Pty Ltd applied for a TCO in respect of certain filter bags on 11 August 2009.
Instrument
TCO No 0929225 was made on 16 October 2009. It declares that those certain filter bags 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. 0929225 is taken to have come into force on 11 August 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 was enacted by the Parliament of Australia to provide a comprehensive framework for the administration of customs and excise. The Act includes provisions for the imposition of customs duty and the granting of tariff concessions to support trade and industry. One of the mechanisms established by the Act is the ability for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which apply lower rates of customs duty to specified goods. The problem this legislation addresses is the potential economic disadvantage faced by Australian businesses that rely on imported goods, particularly when suitable domestic alternatives are not available. By allowing for tariff concessions, the Act aims to enhance the competitiveness of Australian industry and support economic growth. The objective is to ensure that Australian businesses can access necessary goods at reduced costs, thereby promoting efficiency and productivity within the domestic market.
Scope and Application
The Tariff Concession Instrument No. 0929225 under the Customs Act 1901 applies specifically to entities that apply for and receive a Tariff Concession Order (TCO) from the Chief Executive Officer of Customs (CEO). This instrument is designed to provide a lower rate of customs duty for certain goods, in this case, particular filter bags, provided that these goods are not substitutable by any goods produced in Australia in the ordinary course of business. The scope of the Act is such that it benefits importers by potentially allowing them to apply for a refund of duty on goods imported since the TCO is deemed to have come into force. The application of this Act is national, as it operates under the auspices of the Commonwealth, and it does not disadvantage or impose liabilities on any person other than the Commonwealth. The TCO itself does not extend or restrict its application through subordinate instruments, as it is a direct application of the Customs Act 1901 and the Customs Tariff Act 1995.
Key Provisions
The Tariff Concession Order (TCO) No. 0929225, issued under section 269F of the Customs Act 1901, applies a concessional rate of customs duty to certain filter bags. This order, which came into force on 11 August 2009, the date the application was lodged, specifies that these goods are subject to a free rate of duty, as opposed to the general rate of 5% (section 269P(3)). This concession is based on the finding that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was made (section 269C). The CEO of Customs must make a written order declaring the application to meet the core criteria if they are satisfied that the goods are not subject to the exclusions listed in section 269SJ of the Act.
The Act imposes specific obligations on the CEO of Customs, including the requirement to publish a notice in the Gazette after accepting a TCO application as valid, inviting submissions from any interested parties who believe the TCO should not be made (subsection 269K(1)). In this case, no submissions were received in response to the published notice. The Act also requires that the TCO does not affect the rights of any person adversely as at the date of registration, ensuring that it does not impose any liabilities on anyone other than the Commonwealth for actions taken before the TCO came into effect (subsection 269S(1)).
For breaches of the provisions of the Customs Act 1901, the Act includes various civil and criminal penalties. Under the Act, offences may include fraudulent or misleading statements made in an application for a TCO, which can result in fines or imprisonment depending on the severity of the offence. The maximum penalties for offences involving fraud or deceit can reach up to five times the value of the duty evaded or, in some cases, imprisonment for up to five years. These penalties are designed to ensure compliance with the legislative requirements and to protect the integrity of the tariff concession scheme.
In addition to the criminal penalties, there are civil consequences for breaches of the Act, such as the requirement to pay back any duties that were improperly claimed or to compensate any party adversely affected by the breach. The Act also provides for the recovery of costs associated with investigations and proceedings related to breaches. These provisions underscore the seriousness with which the Act treats non-compliance, aiming to deter potential breaches and to uphold the fairness and effectiveness of the customs duty system.