EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0940525
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.
Caltex Refineries NSW Pty Ltd applied for a TCO in respect of certain mooring hooks on 27 October 2009.
Instrument
TCO No 0940525 was made on 15 January 2010. It declares that those certain mooring hooks 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. 0940525 is taken to have come into force on 27 October 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 regulate customs duties and other related matters. Part XVA of this Act introduces the mechanism for Tariff Concession Orders (TCOs) which allow for lower rates of customs duty on specified goods. This legislative instrument was introduced to address the problem of ensuring fair trade practices by providing duty concessions on goods that are not produced in Australia or where Australian-made alternatives do not exist. The Tariff Concession Instrument No. 0940525, made on 15 January 2010, is an example of such an order, declaring that certain mooring hooks are subject to a zero rate of duty. This order was made after Caltex Refineries NSW Pty Ltd applied for the concession, and the Chief Executive Officer of Customs was satisfied that no substitutable goods were produced in Australia. The policy objective behind this and similar instruments is to support Australian industries by ensuring that they are not disadvantaged by the availability of cheaper imported goods, while also providing benefits to importers by allowing them to apply for refunds of duty paid on these goods before the concession was effective.
Scope and Application
The Customs Act 1901 establishes a framework under which the Chief Executive Officer of Customs can grant Tariff Concession Orders (TCOs) to lower the rate of customs duty on certain goods. This scheme applies to any person who makes an application for a TCO in respect of goods, provided that the goods are not those specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. A TCO application will be considered by the CEO if it meets the core criteria, notably if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The Act allows for the application to be extended or restricted through subordinate instruments, ensuring flexibility in the application of the concessions. The TCO does not affect the rights of any person other than the Commonwealth in respect of actions taken before the registration date, thus safeguarding existing rights and imposing no liabilities on any person.
Key Provisions
The Tariff Concession Instrument No. 0940525, as referenced in the Customs Act 1901, applies to certain mooring hooks. Section 269F of the Act permits an application to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO), which can reduce the customs duty on specified goods. If the CEO determines that the application for a TCO is valid and meets the core criteria as outlined in sections 269C and 269B, a TCO will be issued. Specifically, section 269C stipulates that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. Section 269B further defines key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." In this case, the CEO was satisfied that no substitutable goods were produced in Australia, leading to the issuance of TCO No. 0940525 on 15 January 2010. This TCO declares that the specified mooring hooks are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a free rate of duty instead of the general rate of 5%.
The obligations imposed by the Act on parties or entities it governs include the requirement for the CEO to evaluate applications for TCOs, ensuring they meet the specified criteria. The CEO must also publish a notice in the Gazette inviting any interested parties to submit objections to the TCO, as mandated by subsection 269K(1) of the Act. The TCO does not affect the rights of persons other than the Commonwealth as at the date of registration and does not impose any liabilities on any person, as stated in the explanatory statement. The rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO was taken to have come into force, under paragraph 126(1)(r) of the Regulations.
Breaches of the provisions set out in the Customs Act 1901 and associated regulations can lead to civil or criminal consequences. While the explanatory statement does not explicitly detail the penalties for non-compliance with the TCO provisions, general penalties under the Customs Act 1901 for offences such as incorrect declarations or fraudulent practices can include fines and imprisonment. For instance, section 231D of the Act outlines that a person who commits a serious offence can be fined up to $22,000 or imprisoned for up to two years, or both, for an individual, and up to $110,000 or imprisonment for up to five years, or both, for a body corporate. These penalties underscore the importance of adhering to the legislative requirements and obligations imposed by the Customs Act 1901.