EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1022441
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.
Metal Manufacturers Pty Ltd applied for a TCO in respect of certain induction furnaces on 19 May 2010.
Instrument
TCO No 1022441 was made on 09 August 2010. It declares that those certain induction furnaces 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. 1022441 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 was amended by the introduction of Tariff Concession Orders (TCOs) to provide a mechanism for reducing customs duty on specified goods. The Act allows the Chief Executive Officer of Customs to grant concessions where no substitutable goods are produced in Australia. This legislative instrument, F2010L02671, was enacted to address a gap in the tariff structure by allowing for lower duty rates on certain goods that meet specific criteria, thereby encouraging trade and potentially benefiting importers. The policy objective is to streamline the tariff application process and provide economic incentives through reduced duty rates, which aligns with the overarching goal of enhancing Australia's competitive position in the global market. The instrument came into effect on the date of application, 19 May 2010, and no submissions were received in response to the public consultation.
Scope and Application
The Tariff Concession Instrument No. 1022441 applies to Metal Manufacturers Pty Ltd and their application for a Tariff Concession Order (TCO) in relation to certain induction furnaces. The Customs Act 1901 allows the Chief Executive Officer of Customs (CEO) to make TCOs that lower the rate of customs duty on specified goods, provided the application meets the core criteria outlined in section 269C of the Act. This involves ensuring no substitutable goods are produced in Australia at the time of application. The geographic and jurisdictional reach of this Act is national, applying under the Commonwealth, and affects entities and industries involved in the importation of goods subject to the Customs Act. The instrument does not exempt or exclude any specific categories of goods or entities but adheres to the criteria set by the Customs Act. The CEO's decision on the TCO is final, subject to no objections being raised in response to the notice published in the Gazette, as required by subsection 269K(1) of the Act.
Key Provisions
The main operative sections of this legislation are sections 269C, 269P, 269S, and 269K of the Customs Act 1901, which together establish the framework for Tariff Concession Orders (TCOs) and their application process. Section 269C outlines the core criteria for a TCO application, which must be satisfied by the Chief Executive Officer of Customs (CEO) before making a TCO (269C). If these criteria are met, the CEO must issue a written TCO, as stipulated in section 269P(3). The commencement of the TCO, as specified in section 269S, is effective from the day the application is lodged, and section 269K requires the CEO to publish a notice in the Gazette inviting submissions regarding the TCO application.
The Act imposes several obligations on parties and entities it governs. Firstly, an applicant for a TCO must ensure their application meets the core criteria specified in section 269C, particularly that no substitutable goods are produced in Australia on the date the application is lodged (269C). The CEO must then decide whether to issue a TCO based on the application (269P). Once a TCO is issued, it applies to the goods specified in the order, affecting the rate of customs duty as outlined in the order. The CEO is also required to publish a notice in the Gazette inviting submissions regarding the TCO application and to consider any submissions received (269K).
Failure to comply with the requirements of the Customs Act 1901 can result in various penalties and consequences. Although specific offences and penalties are not detailed in the explanatory statement, breaches of the Act could potentially lead to civil or criminal penalties, depending on the nature and severity of the breach. The maximum penalties for breaches of the Customs Act could include fines and imprisonment, as outlined in other relevant sections of the Act. The explanatory statement does not specify these penalties, but they are generally determined by the severity and intent behind the breach.
The TCO No. 1022441 specifically applies to certain induction furnaces, reducing the duty rate from the general rate of 5% to free (Schedule 4, item 50, Customs Tariff Act 1995). The TCO came into effect on 19 May 2010, the date the application was lodged, and it does not affect any rights or impose any liabilities on persons other than the Commonwealth in respect of actions taken before the registration date. Importers of these goods are eligible to apply for a refund of duty on goods imported since the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations.