EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1015004
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.
Bunnings Group Ltd applied for a TCO in respect of certain ornaments on 26 March 2010.
Instrument
TCO No 1015004 was made on 11 June 2010. It declares that those certain ornaments 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. 1015004 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 Commonwealth Parliament, established a legislative framework for the administration of customs duties and other import charges in Australia. To address the need for flexibility in the imposition of tariffs, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can grant concessions on customs duties. This legislative instrument was introduced to ensure that Australian industries can compete effectively in the global market by providing relief where applicable, under specific conditions. The explanatory statement for Tariff Concession Instrument No. 1015004, made in 2010, highlights a particular instance where a TCO was applied to ornaments, reducing the duty rate from 5% to free. This was achieved following an application by Bunnings Group Ltd, and after consultation where no objections were raised. The TCO was effective from the date of application, providing immediate benefit to importers without imposing any new liabilities or disadvantaging any person.
Scope and Application
The Customs Act 1901, through its Part XVA, establishes a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to individuals and entities seeking a lower rate of customs duty for specific goods, provided these goods do not fall under the restricted categories outlined in section 269SJ of the Act. The primary condition for a TCO is that, on the day the application was lodged, there were no substitutable goods produced in Australia in the ordinary course of business, as defined in sections 269C, 269D, 269E, and 269F. The geographic reach of this legislation is national, as it pertains to all goods imported into Australia under the Commonwealth's customs regime. The scope of this Act extends to various industries and transactions involving the importation of goods, and its application can be further refined through subordinate instruments. However, the Act does not disadvantage any person with rights as of the date of registration and does not impose any liabilities on any person.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1015004, under the Customs Act 1901, concern the process and criteria for making Tariff Concession Orders (TCOs) (sections 269C, 269F, 269P). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO for goods. If the application is not in respect of goods prohibited by section 269SJ, the CEO must assess whether the application meets the core criteria in section 269C. If the CEO is satisfied that no substitutable goods were produced in Australia in the ordinary course of business, the CEO is required to issue a written TCO (section 269P). The CEO must also publish a notice in the Gazette inviting submissions from any person who considers that there are reasons why the TCO should not be made (subsection 269K(1)).
The obligations and requirements imposed by the Act on parties or entities it governs include the necessity for the CEO to evaluate TCO applications based on the criteria set out in sections 269C and 269F. The CEO must ensure that no substitutable goods are produced in Australia in the ordinary course of business before issuing a TCO. Additionally, the CEO is obligated to publish a notice in the Gazette, inviting any interested parties to lodge submissions against the proposed TCO (subsection 269K(1)). Once a TCO is issued, the relevant goods are subject to the specified tariff concessions as outlined in the order. The TCO itself does not retroactively affect the rights of any person other than the Commonwealth, ensuring that no pre-existing liabilities are imposed.
Any breaches of the obligations or requirements under the Customs Act 1901 can lead to various consequences. While the specific penalties are not detailed in this instrument, breaches of the Customs Act generally can result in substantial penalties. For example, the Act provides for both civil and criminal penalties, including fines and imprisonment, depending on the severity of the breach. Civil penalties can be substantial, often based on the amount of duty evaded or other financial losses caused by the breach. Criminal penalties can include imprisonment, reflecting the seriousness of the offence. The exact penalties are determined by the specific circumstances of the breach and are subject to the provisions of the Customs Act and other relevant legislation.
The TCO No. 1015004, which was issued on 11 June 2010, declares that certain ornaments are subject to a zero rate of customs duty, instead of the general rate of 5%, due to the CEO's satisfaction that no substitutable goods were produced in Australia. This concession is beneficial for importers, who can apply for a refund of duty on goods imported since the day the TCO is deemed to have come into force (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not disadvantage any person other than the Commonwealth, nor does it impose any new liabilities on any person.