EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1001973
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.
Reliance Worldwide applied for a TCO in respect of certain compression fittings on 12 January 2010.
Instrument
TCO No 1001973 was made on 07 April 2010. It declares that those certain compression fittings 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. 1001973 is taken to have come into force on 12 January 2010.
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 to regulate the import and export of goods into and out of Australia, including the imposition and remission of customs duty. The Act provides for the creation of Tariff Concession Orders (TCOs) under Part XVA, which allows the Chief Executive Officer of Customs to grant tariff concessions on certain goods, effectively lowering the customs duty applied to those goods. This was introduced to address the need for flexibility in customs duty rates to support specific economic and trade policy objectives, such as promoting industry development or responding to market conditions. The policy objective as stated in the Act is to ensure that tariff concessions are granted in accordance with the criteria set out, primarily to prevent the displacement of Australian production. The instrument in question, Tariff Concession Instrument No. 1001973, was made in 2010 in response to an application by Reliance Worldwide for a TCO concerning certain compression fittings, and was enacted without any submissions against it, highlighting the clear intent to provide a tariff concession where no substitutable goods were produced in Australia.
Scope and Application
The Tariff Concession Instrument No. 1001973, under Part XVA of the Customs Act 1901, applies to goods that are the subject of a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs. This Act pertains to individuals or entities seeking to import specific goods into Australia for which a lower rate of customs duty is applicable. The scope of the Act encompasses those goods that are not specified in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The Act is operative on a Commonwealth level, thereby affecting customs practices across Australia. The Act does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person. Furthermore, the Act’s application can be extended or restricted through subordinate instruments. The CEO is mandated to ensure that no substitutable goods are produced in Australia in the ordinary course of business before granting a TCO, ensuring that the concessions do not undermine local production.
Key Provisions
The primary operative sections of this legislation (sections 269C, 269P, and 269S) detail the procedure for making Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269C outlines the core criteria that must be met for an application to be considered valid, which includes the requirement that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. Section 269P(3) mandates that if these criteria are met, the Chief Executive Officer of Customs (CEO) must make a written order (a TCO) specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. Section 269S sets the effective date of a TCO as the day the application was lodged.
Under this Act, entities or individuals seeking a tariff concession must submit an application to the CEO. The CEO is responsible for assessing whether the application meets the core criteria (section 269C). This includes verifying that no substitutable goods are being produced in Australia and that the goods in question are not specified in section 269SJ, which lists those goods that cannot be subject to a TCO. If the CEO is satisfied with the application, they must make a written TCO. Additionally, section 269K(1) requires the CEO to publish a notice in the Gazette inviting any interested parties to submit their views on whether the TCO should be made, although no submissions were received for this particular case.
The Act also outlines the consequences for non-compliance. Although the Explanatory Statement does not explicitly mention any specific offences or penalties for breaching the conditions of a TCO, general provisions under the Customs Act 1901 may apply. Breaches of the Customs Act can result in both civil and criminal penalties. Civil penalties can include financial penalties and, in some cases, the forfeiture of goods. Criminal penalties may include fines and imprisonment, depending on the severity of the offence. The maximum penalties are not specified in this particular piece of legislation but are detailed elsewhere in the Customs Act. The effective date of the TCO means that it does not disadvantage any person other than the Commonwealth and does not impose any liabilities for actions taken before the registration date.