EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1012861
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.
Dixon Asia Pacific applied for a TCO in respect of certain safety locking cotter-pins on 15 March 2010.
Instrument
TCO No 1012861 was made on 04 June 2010. It declares that those certain safety locking cotter-pins 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. 1012861 is taken to have come into force on 15 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. 1012861 was enacted in 2010 under the Customs Act 1901 to address the need for tariff concessions on certain goods, allowing for a lower rate of customs duty to be applied. This instrument, issued by the Chief Executive Officer of Customs, provides tariff relief for specific goods that are not produced in Australia and for which there are no substitutable goods available domestically. The instrument was introduced to facilitate trade by reducing the financial burden on importers of these goods, thus supporting the broader policy objective of enhancing Australia's trade competitiveness and economic efficiency. Following an application by Dixon Asia Pacific for a tariff concession order on certain safety locking cotter-pins, and after no objections were received, the instrument was issued to provide duty-free status for these goods, effective from the date of application, 15 March 2010.
Scope and Application
The Tariff Concession Instrument No. 1012861, made under the Customs Act 1901, applies to the specific category of safety locking cotter-pins that Dixon Asia Pacific applied for on 15 March 2010. The instrument declares that these goods are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free instead of the general rate of 5%. This Act applies to any person or entity that imports these specific goods into Australia, thereby reducing their customs duty obligations. The application and subsequent concession are confined to the Commonwealth jurisdiction and do not extend to state or territory regulations. The Act does not affect the rights of any person other than the Commonwealth as at the date of registration, and importantly, it does not impose any liabilities on persons other than the Commonwealth in respect of actions taken prior to the registration date. The application process and the issuance of the concession are transparent, with the Chief Executive Officer of Customs publishing a notice in the Gazette inviting submissions on the application, although none were received in response to this particular application.
Key Provisions
The Tariff Concession Instrument No. 1012861, under section 269P(3) of the Customs Act 1901, establishes a tariff concession order (TCO) for certain safety locking cotter-pins, as applied for by Dixon Asia Pacific on 15 March 2010. This instrument, effective from the date of application, specifies that the general duty rate of 5% for these goods is reduced to zero. This means that from 15 March 2010, these specific cotter-pins will be exempt from customs duty, thereby lowering the cost for importers bringing them into Australia. The concession applies directly to the goods identified in item 50 of Schedule 4 to the Customs Tariff Act 1995.
Under section 269C of the Customs Act 1901, the Chief Executive Officer of Customs (CEO) must ensure that no substitutable goods are produced in Australia in the ordinary course of business before making a TCO. The CEO must also invite submissions from interested parties under subsection 269K(1) when considering a TCO application. In this case, the CEO did not receive any submissions opposing the TCO for the safety locking cotter-pins. This process ensures transparency and allows stakeholders to voice any concerns regarding the concession before it is finalised. Once the CEO is satisfied that the application meets the core criteria and no substitutable goods are produced in Australia, they must issue a written order as a TCO, as specified in section 269P(3).
The Customs Act 1901 imposes several obligations on parties involved in the TCO process. The CEO must ensure that applications are assessed according to the criteria set out in sections 269C and 269SJ, particularly focusing on whether substitutable goods are being produced in Australia. Importers, on the other hand, must comply with the terms of the TCO and can apply for duty refunds on goods imported since the effective date of the TCO, under paragraph 126(1)(r) of the Regulations. The Act also mandates that the CEO publishes notices in the Gazette to invite submissions from interested parties, ensuring a fair and open process.
Failure to comply with the provisions of the Customs Act 1901 can result in legal consequences. While the Act does not specify maximum penalties for breach of TCO provisions, breaches of the Customs Act generally can lead to both civil and criminal penalties. Civil penalties can include fines and recovery of unpaid duties, while criminal penalties can result in imprisonment, reflecting the seriousness of non-compliance with customs regulations. The Act's provisions aim to maintain the integrity of the customs duty system and ensure that tariff concessions are granted fairly and transparently.