EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1013710
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.
Imparts Automotive Pty Ltd applied for a TCO in respect of certain flywheels on 19 March 2010.
Instrument
TCO No 1013710 was made on 04 June 2010. It declares that those certain flywheels 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. 1013710 is taken to have come into force on 19 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 Customs Act 1901 was enacted to establish a framework for the regulation of customs and excise duties in Australia. The introduction of Tariff Concession Orders (TCOs) under Part XVA of the Act addresses the need for targeted reductions in customs duty on specific goods to promote trade and economic efficiency. The Chief Executive Officer of Customs (CEO) has the authority to make these orders, ensuring that goods which meet certain criteria, such as not having substitutable Australian-made alternatives, can benefit from reduced duty rates. This mechanism was established to provide flexibility in tariff regulation, enhancing Australia's competitive position in international trade while also supporting local industries by preventing unfair competition from imported goods. The policy objective is to facilitate smoother trade flows and economic growth by appropriately adjusting duties on a case-by-case basis, as demonstrated by TCO No. 1013710 granted to Imparts Automotive Pty Ltd for certain flywheels, effective from 19 March 2010.
Scope and Application
The Customs Act 1901 applies to all individuals and entities involved in the importation of goods into Australia, and its provisions extend to goods subject to tariff concession orders. This Act enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that lower the rate of customs duty for specified goods, provided that certain criteria are met. A TCO can be applied for by any person, and the CEO must decide whether the application meets the core criteria, which include ensuring that no substitutable goods are produced in Australia in the ordinary course of business. In the case of TCO No. 1013710, the CEO determined that certain flywheels met the criteria and consequently issued an order making the rate of duty on these goods free, effective from the date the application was lodged. The CEO is required to publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made, although in this instance, no submissions were received. The TCO does not retroactively affect the rights of any person, meaning that any liabilities or rights in relation to goods imported prior to the TCO's effective date remain unchanged.
Key Provisions
The main operative sections of this legislation (sections 269C, 269F, 269K, and 269S) provide the framework for Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the CEO is satisfied that the application meets the core criteria, and that the goods are not specified in section 269SJ, the CEO must make a written order (section 269P(3)). Section 269C specifies the core criteria, which include the condition that no substitutable goods were produced in Australia on the day the application was lodged. Section 269K requires the CEO to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made.
The obligations imposed by this legislation primarily concern the CEO. The CEO must decide whether an application meets the core criteria and must publish a notice in the Gazette inviting submissions from interested parties. If the CEO determines that the application meets the criteria and no submissions are received, they must issue a TCO. The applicant, in this case Imparts Automotive Pty Ltd, must ensure that their application is valid and meets the criteria set out in section 269C.
Failure to comply with the requirements of the Customs Act 1901 or the conditions of a TCO may lead to various consequences. While the Explanatory Statement does not specify particular offences, penalties, or civil/criminal consequences, breaches of the Customs Act can generally result in fines or imprisonment under section 243 of the Act. The maximum penalty for contravening a provision of the Customs Act can extend to two years imprisonment or fines up to the greater of $22,000 or three times the value of the goods involved, depending on the nature and seriousness of the offence. Additionally, under section 269T of the Act, failure to comply with the terms of a TCO may result in the imposition of duty at the general rate, loss of any tariff concession benefits, and potential financial penalties.
In summary, this legislation establishes a process for the CEO to grant tariff concessions on certain goods, provided the application meets specific criteria and no submissions are received opposing the concession. The obligations focus on the CEO's role in evaluating applications and publishing notices. While the specific penalties for non-compliance are not detailed in the Explanatory Statement, general penalties for breaches of the Customs Act are severe and can include imprisonment and significant fines.