EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1006744
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.
Honeywell applied for a TCO in respect of certain fire heat detectors on 08 February 2010.
Instrument
TCO No 1006744 was made on 16 April 2010. It declares that those certain fire heat detectors 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. 1006744 is taken to have come into force on 08 February 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, enacted by the Parliament of Australia, establishes a framework for the regulation of customs and excise duties. It introduced a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. This allows for a lower rate of customs duty to be applied to goods specified in a TCO. The explanatory statement for Tariff Concession Instrument No. 1006744 clarifies the process and criteria for TCO applications, with the objective of facilitating trade by reducing the customs duty burden on certain imported goods, provided they meet specific criteria such as the absence of substitutable goods produced in Australia. In the case of Honeywell's application for a TCO on certain fire heat detectors, the CEO determined that no such substitutable goods were produced in Australia, thereby allowing for the concession to be applied, with the duty rate dropping from 5% to free. This process ensures that the rights of importers are protected and that the concession does not disadvantage any party or impose liabilities for actions taken before the concession's effective date.
Scope and Application
The Tariff Concession Instrument No. 1006744, issued under the Customs Act 1901, applies to the specific goods identified in the instrument, namely certain fire heat detectors, and provides them with a concession on customs duty. This instrument is designed to benefit importers of these goods by granting them a lower tariff rate, from the general 5% to a duty-free rate, contingent on the conditions specified in the Act being met. The concession is effective from the date the application was lodged, 8 February 2010, and applies to the Commonwealth of Australia. The application process and the criteria for the concession are strictly regulated by sections 269C, 269D, 269E, 269F, 269SJ, and 269P of the Act, ensuring that only goods for which no substitutable alternatives are produced in Australia qualify for the tariff reduction. The instrument does not affect any pre-existing rights of persons other than the Commonwealth and imposes no liabilities on individuals other than the Commonwealth, with the rights of importers potentially benefiting from a refund of duty on goods imported since the effective date.
Key Provisions
The Tariff Concession Instrument No. 1006744 (TCO No. 1006744) under the Customs Act 1901 primarily establishes that certain fire heat detectors are subject to a lower rate of customs duty (section 269P(3)). This concession applies because no substitutable goods were produced in Australia on the date the application was lodged, satisfying the core criteria set out in section 269C of the Act. The TCO identifies these specific fire heat detectors as goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, thereby granting them a free rate of duty instead of the general 5% rate.
The Act imposes several obligations on the parties involved in the process of applying for and being subject to a Tariff Concession Order. Firstly, any person can apply to the Chief Executive Officer of Customs (CEO) for a TCO if the goods in question are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO (section 269F). The CEO must then determine whether the application meets the core criteria, specifically whether no substitutable goods were produced in Australia at the time of the application (section 269C). If the CEO is satisfied with the application, they must make a written order declaring the goods subject to a lower rate of duty (section 269P(3)). Additionally, the CEO is required to publish a notice in the Gazette inviting any person who believes the TCO should not be granted to lodge a submission (subsection 269K(1)).
The Act also outlines the consequences for non-compliance with its provisions. While the explanatory statement does not detail specific offences under the Customs Act 1901 in relation to TCOs, general provisions of the Act may apply. These could include civil penalties for non-compliance with customs regulations, which may vary depending on the nature and severity of the breach. Additionally, criminal penalties could be imposed for more serious breaches, including fines and imprisonment. The exact penalties are not specified in the explanatory statement but would be determined under the broader customs legislation and relevant case law.