EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1012535
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.
Futuris Automotive Interiors (Aust) Pty Ltd applied for a TCO in respect of certain automotive seat parts on 12 March 2010.
Instrument
TCO No 1012535 was made on 04 June 2010. It declares that those certain automotive seat parts 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. 1012535 is taken to have come into force on 12 March 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. 1012535, enacted in 2010 under the Customs Act 1901, addresses the need to provide tariff concessions for specific goods to ensure competitive market conditions and to support Australian industries. The instrument was introduced to enable the Chief Executive Officer of Customs to grant lower rates of customs duty on certain goods when they meet specific criteria, particularly where no substitutable goods are produced in Australia. This approach aims to protect domestic industries by ensuring that imported goods do not undercut local production, thereby fostering a fair trading environment. The instrument was made following an application by Futuris Automotive Interiors (Aust) Pty Ltd for tariff concessions on automotive seat parts, which was approved as no substitutable goods were being produced domestically. The effective date of the tariff concession aligns with the application date, ensuring that importers can benefit from the reduced duty rates immediately upon the instrument's enactment.
Scope and Application
The Tariff Concession Instrument No. 1012535, made under the Customs Act 1901, applies specifically to certain automotive seat parts for which Futuris Automotive Interiors (Aust) Pty Ltd applied for a Tariff Concession Order (TCO). The Act facilitates the application of lower rates of customs duty to goods specified in a TCO, provided certain criteria are met. The TCO applies to the particular goods for which the application was made and comes into force on the date the application was lodged, in this case, 12 March 2010. The TCO exempts these goods from the general rate of duty, which is 5%, and instead imposes a rate of duty that is free. The geographic reach of this legislation is national, as it operates under the Commonwealth’s customs regulations. The CEO of Customs was satisfied that the application met the core criteria and that no substitutable goods were produced in Australia in the ordinary course of business, thus allowing for the concession. The TCO does not disadvantage any person or impose liabilities on anyone other than the Commonwealth in respect of actions taken before the TCO was registered.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1012535 (TCO No 1012535) under the Customs Act 1901 (section 269F) allow for the granting of a Tariff Concession Order (TCO) by the Chief Executive Officer of Customs (CEO). This instrument was created in response to an application by Futuris Automotive Interiors (Aust) Pty Ltd, concerning certain automotive seat parts. The key provision of the TCO is that it declares these parts to be subject to a zero rate of customs duty, as opposed to the general rate of 5% (section 269P(3)). The TCO is effective from the date of the application, which was 12 March 2010 (section 269S(1)).
The obligations and requirements imposed by the Act on parties include the necessity for the CEO to determine if an application for a TCO meets the core criteria, particularly that no substitutable goods were produced in Australia in the ordinary course of business (section 269C). The CEO must also publish a notice in the Gazette inviting any interested party to lodge a submission if they believe the TCO should not proceed (section 269K(1)). In this case, no submissions were received, and the TCO was granted. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and it does not impose any new liabilities (section 269S).
In terms of potential offences, penalties, or consequences for breach, the Act does not specify particular offences related to the TCO process itself. However, any failure to comply with the terms of the TCO or the broader Customs Act could lead to legal action. This might include civil penalties for non-compliance with duty obligations or criminal penalties for more serious breaches, such as fraud or smuggling. The maximum penalties for customs-related offences can vary but may include significant fines and imprisonment terms, depending on the severity of the offence.