EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1018376
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.
Australian Solar Manufacturing Pty Ltd applied for a TCO in respect of certain sealants on 22 April 2010.
Instrument
TCO No 1018376 was made on 19 July 2010. It declares that those certain sealants 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. 1018376 is taken to have come into force on 22 April 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 the legal framework for the administration of customs and excise duties. In 2010, the Tariff Concession Instrument No. 1018376 was introduced to address a specific gap in the tariff concession scheme under Part XVA of the Act. This instrument was designed to lower the rate of customs duty on certain goods, in this case sealants, by issuing a Tariff Concession Order (TCO) after an application from Australian Solar Manufacturing Pty Ltd. The policy objective of this measure was to support local manufacturing by ensuring that no substitutable goods were produced domestically, thus facilitating the importation of these goods tariff-free. The instrument came into force on the date the application was lodged, 22 April 2010, and did not adversely affect the rights of any person, nor impose new liabilities. Importers, however, stood to benefit from potential duty refunds for goods imported since the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically Part XVA, provides the legal framework for the issuance of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs. This legislation applies to entities or individuals seeking a reduction in customs duty for specific goods that are not currently produced in Australia and for which no substitutable goods exist domestically. The Act's jurisdiction is national, as it is a Commonwealth Act, thereby affecting all states and territories within Australia. Notably, the Act excludes certain goods specified in section 269SJ from being eligible for a TCO. The process involves an application to the CEO, who assesses whether the application meets the core criteria set out in section 269C, such as the absence of substitutable goods produced in Australia. Once the CEO determines that the application meets these criteria, they must issue a written TCO. The scope of the Act can be extended or refined through subordinate instruments, although the primary legislation itself does not specify any such extensions in this context. The commencement of a TCO is deemed to be effective from the date the application is lodged, as outlined in subsection 269S(1). This ensures that the rights of importers are protected, allowing them to apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The Customs Act 1901, under Part XVA, outlines the process for creating Tariff Concession Orders (TCOs) that allow for a lower rate of customs duty on specified goods (section 269F). An application for a TCO can be submitted to the Chief Executive Officer of Customs (CEO), who will then assess whether the application meets the core criteria. According to section 269C, the core criteria are met if no substitutable goods were produced in Australia at the time the application was made, where 'substitutable goods' refers to goods produced in Australia that can be used in the same way as the goods in question (section 269D and 269E). If these criteria are satisfied, the CEO must issue a TCO, specifying the lower rate of duty (subsection 269P(3)).
The obligations of the parties under this legislation involve ensuring that the goods in question do not have Australian substitutes and that the application is made in accordance with the specified criteria. The CEO has the duty to evaluate the application and make a decision based on the core criteria. If the CEO decides that the application meets the criteria, they must issue a TCO. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties who might have reasons against the TCO being issued (subsection 269K(1)). In this case, no submissions were received, which likely facilitated the swift approval of the TCO.
Failure to comply with the provisions of the Customs Act 1901, particularly in relation to the submission of false information in a TCO application, can lead to significant penalties. The Act does not explicitly outline specific penalties for breaches related to TCOs, but general provisions in the Act and related legislation may apply. For example, knowingly making a false statement in a document related to customs could result in civil or criminal penalties, including fines and imprisonment, depending on the severity of the breach. The specific penalties would be determined in accordance with the relevant sections of the Customs Act 1901 and other applicable laws.