EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0943936
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.
Powers Fasteners Australia Pty Ltd applied for a TCO in respect of certain picture hooks on 19 November 2009.
Instrument
TCO No 0943936 was made on 25 January 2010. It declares that those certain picture 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. 0943936 is taken to have come into force on 19 November 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. 0943936 was enacted under the Customs Act 1901 to address a specific problem in the tariff regime, which was the need to provide tariff concessions on certain imported goods under particular circumstances. This legislation, issued by the Chief Executive Officer of Customs, facilitates the granting of Tariff Concession Orders (TCOs) that result in a lower rate of customs duty for the specified goods. The underlying objective is to support industries by making certain goods more affordable, thereby encouraging their production and use in Australia. This was enacted by the Parliament of Australia, ensuring that the process of tariff concession aligns with national economic policies and trade agreements. The Tariff Concession Order No. 0943936, effective from 19 November 2009, applies to certain picture hooks and provides a zero duty rate, significantly benefiting importers by reducing their costs and potentially increasing the competitiveness of the domestic market.
Scope and Application
The Customs Act 1901, through the Tariff Concession Order No. 0943936, applies to individuals or entities seeking tariff concessions for specific goods, in this case, certain picture hooks applied for by Powers Fasteners Australia Pty Ltd. The Act is applicable to the Commonwealth jurisdiction and concerns the application of a reduced rate of customs duty on specified goods, provided that no substitutable goods are produced in Australia in the ordinary course of business. The CEO of Customs must assess whether the application meets the core criteria, such as the non-existence of substitutable goods produced in Australia, and if satisfied, issue a written order granting the tariff concession. This particular TCO, effective from 19 November 2009, allows for the importation of the specified picture hooks duty-free, whereas the general rate of duty on these goods would otherwise be 5%. The instrument does not affect any existing rights of persons other than the Commonwealth, nor does it impose any liabilities on such persons.
The Act extends its application to all goods that are subject to tariff concession orders, allowing the CEO to implement such orders based on specific criteria and public consultation, as outlined in the Customs Act 1901. Exclusions under section 269SJ of the Act prevent certain goods from being subject to a TCO, ensuring that the scheme operates within defined boundaries. The application of the TCO is further detailed in the Customs Tariff Act 1995, which specifies the items and associated duty rates. The scope of the TCO is limited to the specific goods mentioned in the application and does not extend to other goods or industries unless separately addressed by additional orders.
Key Provisions
The main operative sections of this legislation, specifically Tariff Concession Instrument No. 0943936, are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269S of the Customs Act 1901. These sections set out the criteria for the creation of Tariff Concession Orders (TCOs) and the conditions under which a lower rate of customs duty applies to certain goods. For instance, section 269F allows an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO concerning goods, provided these goods are not specified in section 269SJ. Section 269C outlines the core criteria that must be met for an application to be considered valid, such as ensuring that no substitutable goods are produced in Australia on the day the application is lodged. Section 269B defines key terms used in the criteria, including 'goods produced in Australia' and 'ordinary course of business'. If the CEO determines that the application meets these criteria, section 269P(3) mandates the creation of a written TCO order.
The Act imposes several obligations and requirements on the parties involved. Firstly, an applicant must ensure that their TCO application meets the core criteria as specified in section 269C. This involves verifying that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. The CEO, on the other hand, is required to review the application to confirm that it does not pertain to goods listed in section 269SJ. If the CEO is satisfied that the application meets the core criteria, they must publish a notice in the Gazette inviting any interested parties to submit objections, as per section 269K(1). If no objections are received, the CEO must proceed to issue the TCO. The CEO must also ensure that the TCO does not disadvantage any person or impose liabilities on anyone for actions taken before the TCO's registration date, as stipulated in section 269S(1).
Breach of the provisions outlined in this legislation can lead to various consequences, both civil and criminal. Although the explanatory statement does not detail specific offences, penalties, or consequences, it is clear that failing to comply with the requirements for a TCO could result in legal action. For instance, if an applicant submits a false application that does not meet the core criteria, this could be considered fraudulent activity, potentially leading to criminal charges. Similarly, the CEO may face scrutiny if they fail to properly review an application or publish the required notice in the Gazette. While the specific penalties are not outlined in the explanatory statement, breaches of customs regulations generally can result in substantial fines and other legal repercussions, depending on the severity and intent of the violation.
Additionally, any party adversely affected by the TCO may have grounds for legal action if they believe the TCO was made in error or has unfairly disadvantaged them. This could involve civil litigation to challenge the validity of the TCO or seek compensation for losses incurred. Given that the TCO does not impose any liabilities on any person, the primary focus is on ensuring that the process for granting TCOs is fair and properly adhered to. The lack of specific penalties in the explanatory statement suggests that the focus is on the procedural correctness rather than on punitive measures, but the potential for legal consequences remains if the provisions are not followed correctly.