EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1016642
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 statues on 26 March 2010.
Instrument
TCO No 1016642 was made on 11 June 2010. It declares that those certain statues 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. 1016642 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 Tariff Concession Instrument No. 1016642, enacted under the Customs Act 1901, aims to provide tariff concessions on certain imported goods, specifically statues in this instance. The instrument was introduced to address the problem of ensuring that Australian importers can access goods at a lower duty rate, provided that no substitutable goods are produced in Australia. The policy objective, as stated, is to facilitate the importation of goods for which there is no Australian-made equivalent, thereby benefiting importers by reducing their customs duty liabilities. The instrument was developed following an application by Bunnings Group Ltd and was issued by the Chief Executive Officer of Customs, who determined that no substitutable goods were produced in Australia for these statues. Consequently, the instrument provides a concessional rate of duty, effectively making the duty free for these specific imported statues. The instrument became effective from the date the application was lodged, 26 March 2010, and does not impose any liabilities on persons other than the Commonwealth.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCO), provides a mechanism for the Chief Executive Officer of Customs to grant tariff concessions on specific goods. This Act applies to any person or entity that applies for a tariff concession in respect of goods, ensuring that the application does not pertain to goods specified in section 269SJ of the Act, which outlines those goods ineligible for tariff concessions. The Act's application is national, as it operates under the Commonwealth's authority, and it extends to any goods imported into Australia. The scope of the Act is defined by the core criteria set out in sections 269C, 269B, and 269D, which ensure that no substitutable goods are produced in Australia in the ordinary course of business. Once the CEO is satisfied that the application meets these criteria, a TCO is issued, which can be further detailed through subordinate instruments as necessary. This TCO mechanism ensures that the rights of importers are protected, and no liabilities are imposed on any person other than the Commonwealth for actions taken prior to the TCO's effective date.
Key Provisions
The Customs Act 1901 allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer (CEO) of Customs, with Section 269F detailing the process for application. When an application is submitted, Section 269C sets out the core criteria that must be met for a TCO to be considered. Specifically, the CEO must be satisfied that no substitutable goods are being produced in Australia on the date the application is lodged, as defined by Sections 269D (production in Australia) and 269E (ordinary course of business). If these criteria are met, the CEO is required under Section 269P(3) to issue a written TCO that specifies the reduced rate of customs duty for the goods in question.
The obligations under the Act include the necessity for the CEO to evaluate the TCO application against the core criteria and, if satisfied, to publish a notice in the Gazette inviting submissions from interested parties. This is mandated by Subsection 269K(1) of the Act. The TCO process also necessitates that the CEO consider whether the goods in question are substitutable by Australian-produced goods, as per Section 269B. The Act further ensures that the rights of any person other than the Commonwealth are not adversely affected by the issuance of a TCO, as stipulated by Subsection 269S(1).
In terms of the consequences for non-compliance or breach of the provisions within the Act, it is important to note that the Act does not impose any specific offences or penalties for failure to adhere to the TCO provisions. However, the issuance of a TCO can have significant financial implications for importers, as it lowers the duty rate on the specified goods. Any failure to correctly apply the reduced duty rate could result in the need for duty refunds under Regulation 126(1)(r), which provides for such refunds for importers of goods affected by a TCO. There are no direct penalties outlined in the text for breach of the TCO provisions, but incorrect application of duty rates could lead to financial repercussions for importers.