EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1003017
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.
Actuant Australia applied for a TCO in respect of certain strand jack synchronous lifting systems on 15 January 2010.
Instrument
TCO No 1003017 was made on 09 April 2010. It declares that those certain strand jack synchronous lifting systems 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. 1003017 is taken to have come into force on 15 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 Tariff Concession Instrument No. 1003017, enacted under the Customs Act 1901, was introduced to address the need for a lower rate of customs duty on specific goods that were not being produced in Australia. The Customs Act 1901, particularly Part XVA, establishes a framework for Tariff Concession Orders (TCOs) which can be made by the Chief Executive Officer of Customs. This instrument was created in response to an application from Actuant Australia for certain strand jack synchronous lifting systems, where the CEO determined that no substitutable goods were being produced in Australia in the ordinary course of business. This led to the issuance of Tariff Concession Order No. 1003017 on 9 April 2010, declaring that these goods would be subject to a reduced duty rate from the general rate of 5% to a tariff-free rate. The objective of this legislation is to facilitate access to essential goods by reducing import costs while ensuring that the rights of existing parties are not adversely affected.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), which reduce the customs duty on certain goods. The Act applies to individuals or entities seeking to import goods that qualify for tariff concessions, provided these goods are not specified as ineligible under section 269SJ. The application process involves satisfying the CEO that no substitutable goods are produced in Australia, as defined under sections 269C and 269D, and that the goods are produced in the ordinary course of business as per section 269E. The scope of this legislation is national, operating within the Commonwealth of Australia, and its application is extended or restricted through subordinate instruments, which can specify additional criteria or exclusions. In this instance, TCO No. 1003017, effective from 15 January 2010, granted tariff concessions to certain strand jack synchronous lifting systems, reducing their duty rate to free from the general rate of 5%, upon confirmation by the CEO that no substitutable goods were produced in Australia. The TCO does not affect pre-existing rights or impose new liabilities on non-Commonwealth entities.
Key Provisions
The Customs Act 1901, under section 269F (1), allows an individual or entity to apply for a Tariff Concession Order (TCO) in respect of certain goods. If the Chief Executive Officer (CEO) of Customs is satisfied that the application is valid and does not pertain to goods specified in section 269SJ of the Act, they must then assess whether the application meets the core criteria. According to section 269C, an application meets these core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO determines that the application meets the criteria, they must issue 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, as per subsection 269P(3).
The obligations imposed by the Customs Act 1901 on parties applying for a TCO are quite specific and procedural. Firstly, an applicant must ensure that their application is not in respect of goods specified in section 269SJ of the Act, which outlines the exceptions to TCO eligibility. The CEO must be satisfied that the application is valid, which involves verifying that the goods in question are not substitutable and are not being produced in Australia in the ordinary course of business, as per sections 269C and 269E. Additionally, once an application is accepted, the CEO is required to publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not be made, as per subsection 269K(1). Finally, if the CEO is satisfied with the application, they must issue the TCO as per subsection 269P(3).
Breaching the requirements of the Customs Act 1901 can have significant consequences. There are no specific criminal offences outlined in the explanatory statement for failing to comply with the TCO provisions; however, the penalties for non-compliance with customs regulations can be severe. For instance, under the Crimes Act 1914, knowingly making a false statement in a customs document can result in a fine of up to 10,000 penalty units or imprisonment for up to five years, or both. Additionally, any failure to comply with the conditions of a TCO could potentially lead to financial penalties or legal action for breach of the order. The Act ensures that the rights of importers are beneficially affected by the TCO, allowing them to apply for a refund of duty on goods imported since the TCO came into force, as per paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any new liabilities on any person, ensuring that only the Commonwealth's rights are protected against disadvantage.