EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1014870
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.
Honeywell Ltd applied for a TCO in respect of certain fire alarm switches on 26 March 2010.
Instrument
TCO No 1014870 was made on 18 June 2010. It declares that those certain fire alarm switches 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. 1014870 is taken to have come into force on 26 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, enacted by the Australian Parliament, provides a framework for the administration of customs and excise duties in Australia. One of its key mechanisms is the establishment of Tariff Concession Orders (TCOs) under Part XVA, which allow for the reduction of customs duty on specific goods. The objective of this legislation is to facilitate access to goods that are not produced domestically by reducing the financial burden on importers and consumers. This is achieved by ensuring that when no substitutable goods are produced in Australia, the goods in question can benefit from reduced tariffs. The Tariff Concession Instrument No. 1014870, issued on 18 June 2010, exemplifies this mechanism by granting Honeywell Ltd a concession on certain fire alarm switches, effectively setting the duty rate to zero where the general rate would otherwise be 5%. This instrument was introduced following a valid application under section 269F and subsequent determination by the Chief Executive Officer of Customs that the application met the core criteria as stipulated in the Act.
Scope and Application
The Tariff Concession Instrument No. 1014870 under the Customs Act 1901 applies specifically to goods that are the subject of a Tariff Concession Order (TCO), which are granted to reduce the rate of customs duty on certain imported goods. This Act pertains to entities or individuals seeking to import specific goods, namely fire alarm switches in this case, for which Honeywell Ltd applied on 26 March 2010. The application was processed by the Chief Executive Officer of Customs (CEO) who, upon satisfaction that no substitutable goods were produced in Australia and that the application met the core criteria, issued the TCO on 18 June 2010. The TCO effectively reduces the general rate of duty from 5% to free for the specified goods. The application of the TCO is nationwide, aligning with the overarching objectives of the Customs Act 1901 and its Schedule 4 under the Customs Tariff Act 1995. There are no exclusions or exemptions specified within the Act for this particular TCO, and it does not impose any liabilities on persons other than the Commonwealth. The CEO is required to publish a notice in the Gazette inviting submissions against the TCO application, although in this instance, no submissions were received. The TCO is deemed to have come into force on the date the application was lodged, 26 March 2010.
Key Provisions
The main sections of this legislation pertain to Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows for the application of a TCO by any person to the Chief Executive Officer of Customs (CEO), with the aim of obtaining a lower rate of customs duty for specific goods. The CEO is required to assess whether the application meets the core criteria outlined in section 269C, which mandates that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the application is deemed valid, a TCO is issued under section 269P(3), which specifies the reduced rate of duty for the goods in question. In this instance, TCO No. 1014870 was issued for certain fire alarm switches, applying 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%.
The obligations imposed by the Customs Act 1901 on parties and entities include the requirement for applicants to ensure their TCO applications are made in accordance with the criteria stipulated in sections 269C and 269F. The CEO, upon receiving a valid application, must undertake a thorough review to ascertain that the core criteria are satisfied and subsequently publish a notice in the Gazette, inviting any interested parties to submit any objections. Once the application is approved, the CEO is responsible for issuing the TCO, which comes into effect on the date the application was lodged, as per section 269S(1). In this particular case, Honeywell Ltd applied for the TCO for fire alarm switches, and the CEO issued TCO No. 1014870 on 18 June 2010.
Breaching the requirements of the Customs Act 1901 or failing to comply with the terms of a TCO can result in legal consequences. For example, section 269H of the Act imposes penalties for making false or misleading statements in a TCO application. The penalties for such offences can include fines and, in serious cases, imprisonment. The maximum penalties for breaches are outlined in the Crimes Act 1914, which may include fines of up to $22,200 for individuals and $111,000 for corporations, depending on the severity of the offence. Additionally, any person found to be in breach of a TCO may be subject to civil proceedings for any losses incurred as a result of the breach. The consequences for non-compliance are therefore both financial and legal, underscoring the importance of adherence to the provisions of the Act.