EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0941082
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.
Power Equipment Pty Ltd applied for a TCO in respect of certain fish farming nets cleaner on 30 October 2009.
Instrument
TCO No 0941082 was made on 22 January 2010. It declares that those certain fish farming nets cleaner 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. 0941082 is taken to have come into force on 30 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 Tariff Concession Instrument No. 0941082, enacted in 2010 under the Customs Act 1901, was introduced to address the issue of providing tariff concessions for specific goods, thereby reducing the customs duty on these items. This instrument was created in response to applications such as the one from Power Equipment Pty Ltd for fish farming nets cleaner, where it was determined that no substitutable goods were produced in Australia. The policy objective, as outlined in the explanatory statement, is to provide tariff concessions for goods that meet the core criteria, ensuring that such concessions do not disadvantage any person or impose new liabilities. The instrument was made by the Chief Executive Officer of Customs after satisfying the core criteria set out in the Act and followed due process, including publishing a notice in the Gazette for any objections, which none were received. This instrument effectively reduces the customs duty on specified goods, in this case from 5% to free, and allows for the refund of duty for importers of such goods since the effective date of the concession.
Scope and Application
The Customs Act 1901, through Part XVA, establishes the framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), aimed at granting lower rates of customs duty on specified goods. These orders apply to individuals or entities that have submitted an application for a TCO in relation to goods, provided that the goods are not excluded under section 269SJ of the Act, and the application meets the core criteria as outlined in sections 269C, 269D, 269E and 269F. A notable example is TCO No. 0941082, which was issued for certain fish farming nets cleaners, where the CEO determined that no substitutable goods were produced in Australia, thus allowing the TCO to proceed with a duty-free rate. This legislative framework extends across the Commonwealth, applying uniformly throughout Australia, and includes provisions for public consultation when a TCO application is accepted as valid, ensuring transparency and opportunity for objections. The Act also ensures that the TCO does not affect the rights of any person other than the Commonwealth adversely, nor does it impose any liabilities on individuals or entities for actions taken prior to the order's effective date.
Key Provisions
The main operative sections of this legislation revolve around the process and criteria for making Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). The application process (section 269C) requires that the goods in question are not specified in section 269SJ of the Act and that, at the time of application, no substitutable goods were produced in Australia in the ordinary course of business (section 269P(3)). Once the application meets the core criteria, the Chief Executive Officer (CEO) of Customs must make a written order (section 269P(3)). TCO No. 0941082, made on 22 January 2010, declares that certain fish farming nets cleaner are goods to which a specified item of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in a free rate of duty on these goods (section 269P(3)).
The Act imposes several obligations on the parties it governs. The CEO must ensure that the application for a TCO is valid and not in respect of goods specified in section 269SJ of the Act (section 269F). The CEO must also verify that the application meets the core criteria, which involves confirming that no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Additionally, as soon as practicable after accepting a TCO application as valid, the CEO must publish a notice in the Gazette, inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). TCO No. 0941082 was made following these requirements, and no submissions were received in response to the published notice.
Failure to comply with the requirements of the Customs Act 1901 or the associated regulations could lead to various civil and criminal consequences. Specifically, breaches of the Act may result in penalties as outlined in section 221 of the Act, which includes fines and imprisonment. The maximum penalty for breaches can be substantial, depending on the severity of the offence. For instance, section 221(1) of the Act specifies that a person who contravenes certain provisions can be fined up to 120 penalty units or imprisoned for up to six months, or both. It is essential for parties governed by this legislation to adhere strictly to the requirements to avoid these potential consequences.