EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1009419
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.
Homag applied for a TCO in respect of certain storage and retrieval system wood panels on 22 February 2010.
Instrument
TCO No 1009419 was made on 07 May 2010. It declares that those certain storage and retrieval system wood panels 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. 1009419 is taken to have come into force on 22 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 was enacted by the Parliament of Australia to regulate the customs duties and related processes for imported and exported goods. This Act was amended to include a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, allowing for lower rates of customs duty on certain goods. Tariff Concession Instrument No. 1009419, enacted on 7 May 2010, addresses the specific issue of applying a concessional rate of customs duty to certain storage and retrieval system wood panels. The instrument was introduced following an application by Homag, and the CEO of Customs was satisfied that no substitutable goods were produced in Australia, meeting the core criteria under the Act. The policy objective is to provide tariff relief on goods that are not produced domestically, thereby potentially lowering import costs and encouraging the use of these goods within the Australian market.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to specific goods for which an application has been made, provided the goods are not excluded under section 269SJ, and the application meets the core criteria outlined in section 269C. A TCO application meets these criteria if, on the day it was lodged, there were no substitutable goods produced in Australia in the ordinary course of business, as defined by sections 269D and 269E. If the CEO is satisfied with the application, a TCO is issued, specifying a lower rate of customs duty for the goods in question. This instrument applies to any person who applies for a TCO on behalf of specified goods, with its reach encompassing the entire Commonwealth of Australia. The scope of the Act is extended through subordinate instruments, including the Customs Tariff Act 1995, which provides the tariff schedule that TCOs reference. The TCOs do not affect pre-existing rights or liabilities of individuals other than the Commonwealth, and the rights of importers are positively impacted, allowing them to apply for duty refunds on goods imported since the TCO came into effect.
Key Provisions
The primary operative sections of this legislation are sections 269C, 269P(3) and 269S of the Customs Act 1901 (the Act). Section 269C sets out the core criteria that must be met for a Tariff Concession Order (TCO) to be made, which includes the requirement that on the day on which the application for the TCO was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) provides that if the Chief Executive Officer of Customs (the CEO) is satisfied that the 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. Section 269S explains that the TCO is taken to have come into force on the day on which the application for the TCO was lodged.
The obligations imposed by the Act on the parties it governs include the requirement for the CEO to assess applications for TCOs and determine whether they meet the core criteria set out in section 269C. If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Tariff applies. The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as a valid application, inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO.
The Act provides for a range of offences, penalties, and civil or criminal consequences for breach. Section 277 of the Act provides that any person who contravenes any provision of the Act is liable to a penalty not exceeding 10,000 penalty units (currently AUD 1.7 million) or imprisonment for a period not exceeding five years, or both. Section 277A provides that any person who contravenes any provision of the Act that relates to the payment of duty or tax is liable to a penalty not exceeding 100,000 penalty units (currently AUD 17 million) or imprisonment for a period not exceeding ten years, or both. The maximum penalties for breaches of the Act are therefore significant, and may include both fines and imprisonment.
In summary, the main operative sections of this legislation set out the requirements for making a TCO, including the core criteria that must be met for an application to be considered. The Act imposes obligations on the CEO to assess applications and determine whether they meet the core criteria, and to publish notices in the Gazette inviting submissions from interested parties. There are also significant penalties for breach of the Act, including fines and imprisonment.