EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1014978
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.
Airco Fasteners Pty Ltd applied for a TCO in respect of certain nails on 26 March 2010.
Instrument
TCO No 1014978 was made on 18 June 2010. It declares that those certain nails 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. 1014978 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 was enacted to provide for the regulation of customs and excise duties, among other things. The Act established a framework for the application of tariff concession orders, which allow for the reduction or exemption of customs duties on specific goods. Enacted by the Commonwealth Parliament, this legislation aimed to address gaps in the customs duty system, ensuring that businesses could apply for reduced duty rates where appropriate. Specifically, the Tariff Concession Order No. 1014978, made under the Customs Act, was introduced to provide a tariff concession for certain nails by Airco Fasteners Pty Ltd. The order was made on 18 June 2010 after the CEO of Customs was satisfied that no substitutable goods were produced in Australia, thus meeting the core criteria. The policy objective was to facilitate trade by reducing the duty on these specific goods, benefiting importers who could now apply for a refund of duties on imported goods since the effective date of the concession.
Scope and Application
The Customs Act 1901, as amended, governs the process through which Tariff Concession Orders (TCOs) can be made to provide tariff concessions on certain goods, and applies to any person who wishes to apply for such an order. The application process is overseen by the Chief Executive Officer of Customs (CEO), who is required to ensure that the application meets the core criteria outlined in the Act, specifically that no substitutable goods are produced in Australia in the ordinary course of business. Once a TCO is approved, the goods in question are granted a lower rate of customs duty, as specified in the Customs Tariff Act 1995. The scope of this legislation is national, applying across Australia. It does not, however, apply to goods specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO. The CEO is also mandated to publish a notice in the Gazette inviting any interested parties to lodge submissions regarding the TCO application; if no submissions are received, the CEO must proceed with the order. The commencement of a TCO is effective from the date the application is lodged, and it does not disadvantage or impose liabilities on any person other than the Commonwealth for actions taken before the registration date.
Key Provisions
The primary sections of Tariff Concession Instrument No. 1014978 under the Customs Act 1901 (section 269F) establish the framework for the application and issuance of Tariff Concession Orders (TCOs). A person can apply to the Chief Executive Officer of Customs (CEO) for a TCO, provided the goods in question are not specified in section 269SJ as ineligible. If the application meets the core criteria set out in section 269C, the CEO must issue a written order, declaring that the goods specified in the application are subject to a lower rate of customs duty as outlined in the Customs Tariff Act 1995. For the nails in question, this means they are subject to a free rate of duty rather than the general 5% rate.
The Act imposes several obligations on parties involved in the TCO process. The applicant must ensure their application adheres to the requirements of section 269F and does not pertain to goods specified in section 269SJ. The CEO must verify that no substitutable goods are produced in Australia on the day the application is lodged, as per section 269C. Furthermore, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not be made, as per subsection 269K(1). In this case, no submissions were received, and the CEO proceeded to issue the TCO.
The Act also delineates the consequences for breaches of its provisions. While the explanatory statement does not specify criminal penalties, it does clarify that the TCO does not affect the rights of any person as at the date of registration and does not impose any liabilities on any person in respect of actions taken prior to the registration date. The rights of importers, however, will be positively affected, as they will be able to apply for a refund of duty on goods imported since the TCO's effective date, according to paragraph 126(1)(r) of the Regulations. Any failure to comply with the conditions set out by the Act could potentially lead to legal actions for breach of the established procedures or rights, but no specific civil or criminal penalties are mentioned in the explanatory statement.