EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0930347
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.
James Hardie Pty Ltd applied for a TCO in respect of certain vacuum coater on 19 August 2009.
Instrument
TCO No 0930347 was made on 06 November 2009. It declares that those certain vacuum coater 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. 0930347 is taken to have come into force on 19 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 Australian Parliament to provide a framework for the administration of customs and excise duties. One of the mechanisms under this Act is the Tariff Concession Order (TCO), which allows for the concession of customs duty on certain imported goods. The explanatory statement for Tariff Concession Instrument No. 0930347 clarifies the process and application of a TCO. Specifically, this instrument was introduced to address the issue of tariff concessions for certain vacuum coaters, where James Hardie Pty Ltd applied for a reduction in duty rates on these goods. The instrument was made on 6 November 2009, after the application was lodged on 19 August 2009. The Chief Executive Officer of Customs found that no substitutable goods were produced in Australia, thus satisfying the core criteria for the concession. As a result, the duty rate for these vacuum coaters was set to free, down from the general rate of 5%. The policy objective here is to ensure that the application of TCOs is transparent and benefits importers by potentially allowing them to claim refunds for duties paid on imports before the concession was effective.
Scope and Application
The Tariff Concession Instrument No. 0930347, made under section 269F of the Customs Act 1901, applies to specific goods, namely certain vacuum coaters, and provides a concession on the customs duty applicable to these goods. This Act applies to James Hardie Pty Ltd as the applicant, and the geographic reach is national, as the instrument operates within the framework of the Commonwealth of Australia. The application of this instrument is limited to the goods specified in the TCO and excludes any goods listed in section 269SJ of the Customs Act 1901, which are ineligible for tariff concessions. The application process involves the Chief Executive Officer of Customs, who must be satisfied that no substitutable goods are produced in Australia in the ordinary course of business before issuing a Tariff Concession Order. The instrument extends its application through the Customs Tariff Act 1995, specifying the tariff item under which the concession applies, thereby reducing the duty rate from the general 5% to free. The instrument's commencement is retroactive to the date the application was lodged, ensuring that importers can benefit from the reduced duty rate and potentially apply for refunds on duties paid prior to the instrument's effective date.
Key Provisions
The main sections of Tariff Concession Instrument No. 0930347 under the Customs Act 1901 (section 269F) allow for the application of tariff concessions on certain goods. If an application is made for a Tariff Concession Order (TCO) by a person, and the Chief Executive Officer of Customs (CEO) determines that the application is valid and meets the core criteria (section 269C), a TCO is issued, effectively lowering the duty on those goods (section 269P(3)). For example, in this case, the TCO No. 0930347 made on 6 November 2009, reduced the duty on certain vacuum coaters from 5% to free.
The Act imposes certain obligations on parties applying for a TCO. The applicant must ensure that no substitutable goods are produced in Australia (section 269C), and if the CEO is satisfied that the application meets these criteria, a TCO is issued. The CEO also has a duty to publish a notice in the Gazette inviting submissions on the TCO application (subsection 269K(1)). In this instance, no submissions were received in response to the published notice.
Failure to comply with the requirements of the Act or the TCO can lead to significant consequences. While the explanatory statement does not detail specific offences or penalties, breaches of the Customs Act 1901 can generally lead to civil or criminal penalties, depending on the nature and severity of the breach. For instance, under section 223 of the Customs Act, a person who contravenes the Act can be liable to a fine of up to $22,200 for individuals or $111,000 for corporations, or imprisonment for up to two years, or both, in the case of criminal offences. Civil penalties can also be imposed, which may include fines or other monetary penalties.