EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1003371
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.
Xtek Ltd applied for a TCO in respect of certain body storage systems on 19 Janaury 2010.
Instrument
TCO No 1003371 was made on 09 April 2010. It declares that those certain body storage 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. 1003371 is taken to have come into force on 19 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, as amended, establishes a framework for the management of customs duties, including the issuance of Tariff Concession Orders (TCOs) under Part XVA. Enacted by the Commonwealth Parliament, this Act aims to provide relief from customs duties on specific goods that are not produced in Australia, thereby encouraging the importation of such goods to benefit consumers and the market. The Act allows the Chief Executive Officer of Customs to grant a TCO if an application is made and the core criteria are met, which includes the condition that no substitutable goods are produced in Australia. The problem or gap this legislation addresses is the potential economic disadvantage faced by consumers due to the absence of locally produced alternatives for certain goods, thus promoting fair competition and consumer choice. The explanatory statement for Tariff Concession Instrument No. 1003371 illustrates this process, detailing the application by Xtek Ltd for tariff concessions on certain body storage systems, which were granted following confirmation that no substitutable goods were produced in Australia, resulting in a duty rate of free instead of the general 5%.
Scope and Application
The Customs Act 1901, as detailed in Tariff Concession Instrument No. 1003371, pertains to the application and administration of Tariff Concession Orders (TCOs) which reduce the rate of customs duty on specified goods. This Act applies to any person or entity seeking a reduction in customs duty on particular goods, provided the goods do not fall under the exclusions specified in section 269SJ of the Act. The Act allows the Chief Executive Officer of Customs to assess and grant TCOs if the application meets the core criteria, which include the absence of substitutable goods produced in Australia. The instrument and its application extend across the Commonwealth of Australia, impacting importers of the specified goods by potentially allowing them to apply for refunds of duty paid prior to the TCO's effective date. Notably, the Act ensures that the application of the TCO does not retroactively disadvantage or impose liabilities on any person other than the Commonwealth, safeguarding existing rights and obligations.
Key Provisions
The primary operative sections of this legislation are sections 269C, 269B, 269D, 269E, 269P, and 269SJ of the Customs Act 1901 (the Act). Section 269C establishes the core criteria that must be met for an application for a Tariff Concession Order (TCO) to be considered valid. Section 269B defines key terms such as "goods produced in Australia" and "ordinary course of business," while section 269E specifies the meaning of "substitutable goods." Section 269P(3) stipulates that if the Chief Executive Officer of Customs (CEO) is satisfied that an application meets the core criteria, they must make a written order declaring the goods in question to be subject to a specified item in Schedule 4 to the Customs Tariff Act 1995. Finally, section 269SJ lists the goods that cannot be the subject of a TCO.
Under the Customs Act, the CEO has specific obligations when processing an application for a TCO. Once an application is deemed valid, the CEO must publish a notice in the Gazette, inviting any person who believes the TCO should not be granted to lodge a submission. This process ensures that all relevant stakeholders have an opportunity to voice their concerns. Additionally, the Act mandates that a TCO is taken to have come into force on the day the application is lodged, ensuring that any benefits of the concession apply retroactively from that date.
The legislation imposes several requirements on the parties involved. For applicants, the primary requirement is to ensure that their application meets the core criteria as outlined in section 269C. This includes demonstrating that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The CEO, on the other hand, must rigorously assess each application against these criteria and, if satisfied, make a written TCO. Importers of the goods in question will also need to comply with regulations regarding refunds of duty paid on goods imported since the effective date of the TCO.
Breaching the provisions of the Customs Act can lead to various consequences. While the specific offences, penalties, or civil and criminal consequences for breach are not detailed in the explanatory statement, it is reasonable to infer that failure to comply with the Act's requirements could result in penalties under general customs law. Such penalties may include fines or other sanctions for non-compliance. The maximum penalties would depend on the specific nature of the breach and the applicable provisions of the Customs Act.