EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1009880
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.
Blucher Australia applied for a TCO in respect of certain drainage fittings on 25 February 2010.
Instrument
TCO No 1009880 was made on 14 May 2010. It declares that those certain drainage 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. 1009880 is taken to have come into force on 25 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 Tariff Concession Instrument No. 1009880 was enacted in 2010 under the Customs Act 1901, aiming to address the problem of imposing lower rates of customs duty on specific goods, in this case, certain drainage fittings, provided no substitutable goods are produced in Australia. This legislative instrument was introduced to streamline the application process for tariff concessions, ensuring that the core criteria are met efficiently by the Chief Executive Officer of Customs. The policy objective is to facilitate the importation of goods by reducing duty rates, thereby benefiting importers and encouraging trade. The CEO's decision to grant the concession followed a thorough review of the application and no objections were raised during the consultation period, leading to the implementation of the concession on the date of the application.
Scope and Application
The Customs Act 1901 provides a framework through which the Chief Executive Officer of Customs (CEO) can issue Tariff Concession Orders (TCOs) under Part XVA, which applies to applications for a lower rate of customs duty on specified goods. This mechanism ensures that when an applicant, such as Blucher Australia, submits an application for a TCO, the CEO assesses whether the application meets the core criteria as outlined in section 269C of the Act. Specifically, the CEO must be satisfied that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined in sections 269D and 269E of the Act. If these criteria are met, the CEO is required to make a written TCO, as was done for certain drainage fittings in TCO No. 1009880. This TCO exempts the specified goods from the general rate of duty, which is 5%, and applies a duty rate of free. The application of the TCO is retrospective to the date of the application, 25 February 2010, without affecting the rights of any person as at the date of registration or imposing liabilities on any person for actions taken prior to the registration date.
Key Provisions
The Customs Act 1901, specifically Part XVA, provides the legal framework for the creation of Tariff Concession Orders (TCOs), as outlined in the Explanatory Statement for Tariff Concession Instrument No. 1009880. Section 269F of the Act allows for an application to the Chief Executive Officer of Customs (CEO) for a TCO in respect of particular goods. If the CEO determines that the application does not pertain to goods specified in section 269SJ, which are ineligible for TCOs, the CEO must then assess whether the application meets the core criteria as stipulated in section 269C. This criterion is satisfied if, on the date of the application, no substitutable goods were produced in Australia in the ordinary course of business, with definitions provided in sections 269D, 269E, and 269F.
The obligations imposed by the Act on parties or entities it governs are clear and specific. The CEO, upon receiving an application for a TCO, must ensure that the application does not involve goods that are ineligible under section 269SJ. Once this preliminary check is complete, the CEO must verify if the application meets the core criteria, which involves confirming that no substitutable goods were produced in Australia in the ordinary course of business on the application date. If these conditions are met, the CEO is mandated to issue a written order, the Tariff Concession Order, as per section 269P(3). This order declares that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively applying a lower rate of customs duty.
The Act also delineates the consequences for breaches of its provisions. Although the Explanatory Statement does not explicitly state the penalties for non-compliance with the Act or the TCO, it is reasonable to infer that breaches may lead to civil or criminal penalties, as is typical with legislative compliance issues in Australia. For example, providing false information in an application could be considered a civil or criminal offence, depending on the circumstances and the intent behind the false information. The maximum penalties for such offences would depend on the specific nature of the breach and the relevant sections of the Customs Act 1901 or other applicable laws. It is also important to note that the rights of importers are beneficially affected by the TCO, and they may apply for a refund of duty on goods imported since the TCO is taken to have come into force, as per paragraph 126(1)(r) of the Regulations.