EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1022426
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.
Kantfield Pty Ltd applied for a TCO in respect of certain polyoxymethylene copolymer resins on 19 May 2010.
Instrument
TCO No 1022426 was made on 17 August 2010. It declares that those certain polyoxymethylene copolymer resins 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. 1022426 is taken to have come into force on 19 May 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 regulation of customs and excise through various mechanisms, including Tariff Concession Orders (TCOs). The Act was introduced to address the need for flexibility in customs duty rates to support economic growth and to promote trade. Specifically, TCOs aim to lower customs duties on certain goods, facilitating their import and use in Australia. Tariff Concession Instrument No. 1022426, made under the Customs Act, was introduced on 17 August 2010 to provide tariff concessions for certain polyoxymethylene copolymer resins. The instrument was made after Kantfield Pty Ltd applied for a TCO on 19 May 2010, and the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, meeting the core criteria. The policy objective was to ensure that the tariff concessions did not disadvantage any person and to allow importers to apply for a refund of duty on goods imported since the effective date of the TCO.
Scope and Application
The Customs Act 1901 provides a mechanism for tariff concessions that apply to specific goods, as outlined in the Explanatory Statement for Tariff Concession Instrument No. 1022426. This Act applies to individuals or entities seeking to import goods that are not currently produced in Australia, allowing for a reduced rate of customs duty on those goods. The instrument in question relates to polyoxymethylene copolymer resins, where the application for a Tariff Concession Order (TCO) was accepted by the Chief Executive Officer of Customs (CEO) on 19 May 2010. The CEO's decision to grant the concession was based on the absence of substitutable goods being produced in Australia on the day the application was lodged, fulfilling the core criteria set out in the Act. The TCO exempts these specific resins from the general duty rate of 5%, instead applying a duty-free rate, and came into force on the date the application was lodged. The scope of the Act extends to national borders, applying Commonwealth-wide, and the concessions do not impose liabilities on any person other than the Commonwealth, nor do they affect the rights of any person as at the date of registration of the TCO.
Key Provisions
The primary sections of this legislation focus on the creation and effects of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). These orders can be applied for by any person and, if approved, they apply a lower rate of customs duty to specified goods (section 269C). A crucial aspect is that the goods must not be substitutable by any produced in Australia (section 269D), and the application must meet the core criteria that no such goods are produced in the ordinary course of business (section 269E). Upon approval, the CEO must issue a written TCO specifying the tariff item from Schedule 4 of the Customs Tariff Act 1995 applicable to the goods (subsection 269P(3)).
The obligations under this Act primarily rest on the CEO, who must ensure that any TCO application meets the core criteria before issuing the order. The CEO is also mandated to publish a notice in the Gazette inviting submissions from the public regarding the application (subsection 269K(1)). Although no submissions were received in this case, the process ensures transparency and accountability in the decision-making process. The rights of importers are protected as they can apply for a refund of duty paid on the specified goods since the effective date of the TCO (paragraph 126(1)(r) of the Regulations).
The legislation does not explicitly state any criminal offences or penalties for non-compliance with the provisions of a TCO. However, the failure to comply with the requirements of the Customs Act 1901 or the Customs Tariff Act 1995 in general can lead to civil or administrative penalties. For example, knowingly making a false statement in a customs declaration can result in a civil penalty of up to $22,200 or criminal penalties, including fines and imprisonment. Additionally, the CEO has the authority to take enforcement actions against any breach of the Customs Act, which can include fines and other legal repercussions.
The Act ensures that the implementation of TCOs is transparent and fair, providing a clear pathway for applicants and protecting the interests of importers and other stakeholders. The effective date of the TCO is the day the application is lodged, ensuring that rights and liabilities are clearly defined from the outset (subsection 269S(1)). This structured approach helps maintain the integrity of the customs duty system while providing targeted relief to importers of specified goods.