EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1023397
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.
NFK Glazing & Industrial Supplies Pty Ltd applied for a TCO in respect of certain door hinges on 26 May 2010.
Instrument
TCO No 1023397 was made on 17 August 2010. It declares that those certain door hinges 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. 1023397 is taken to have come into force on 26 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 Commonwealth Parliament, establishes a framework for the regulation of customs and excise within Australia. This Act was designed to streamline the process of applying for tariff concessions to ensure that businesses have access to necessary imported goods at reduced duty rates where appropriate. One of the key mechanisms within this Act is the Tariff Concession Order (TCO), which allows the Chief Executive Officer of Customs to reduce or eliminate customs duty on specific goods under certain conditions. The Tariff Concession Instrument No. 1023397, introduced in 2010, exemplifies the application of this framework. It was enacted in response to an application by NFK Glazing & Industrial Supplies Pty Ltd for a tariff concession on certain door hinges. The policy objective was to provide relief to businesses that rely on importing specific goods not produced domestically, thereby supporting competitiveness and economic efficiency. The instrument was effective from the date of application, 26 May 2010, and no submissions were received opposing the concession, indicating a clear alignment with the Act's objectives.
Scope and Application
The Customs Act 1901, as amended, facilitates the application of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs may reduce or eliminate customs duty on specific goods. This legislation applies to any person or entity that imports goods eligible for a TCO, which is contingent upon the absence of substitutable goods produced in Australia in the ordinary course of business. The application of this legislation is nationwide, encompassing the entire Commonwealth of Australia, and it extends to all industries and transactions involving the importation of goods that meet the criteria for tariff concessions. Notably, certain goods are excluded from TCO consideration, specifically those listed in section 269SJ of the Act. The scope of the Act can be further defined or expanded through subordinate instruments, which may include regulations and further clarifications regarding the application and interpretation of the core criteria for TCO eligibility. The commencement of a TCO is effective from the date the application is lodged, ensuring that the rights of importers are beneficially impacted without imposing any liabilities for actions taken prior to the order's effective date.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 1023397 under the Customs Act 1901 (section 269C) require that a Tariff Concession Order (TCO) can be applied for by a person, provided the goods in question are not specified in section 269SJ. The Chief Executive Officer (CEO) of Customs must determine if the application meets the core criteria, which are outlined in section 269C and involve ensuring that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO finds that the application meets these criteria, they are obligated to make a written TCO.
The Act imposes several obligations on the parties involved. Firstly, section 269K(1) mandates that the CEO must publish a notice in the Gazette, inviting any interested parties to submit reasons why the TCO should not be made. This transparency measure ensures that all relevant stakeholders have an opportunity to voice their concerns. Additionally, section 269S(1) specifies that the TCO is to be taken as coming into force on the date the application was lodged, which in this case is 26 May 2010. The TCO does not affect the rights of any person except the Commonwealth, ensuring that no existing rights are disadvantaged and no new liabilities are imposed on any person other than the Commonwealth.
Failure to comply with the provisions of the Customs Act 1901 can result in civil or criminal consequences. Under the Act, breaches of the conditions set out in a TCO could lead to penalties. While the explanatory statement does not detail specific penalties, the Customs Act generally provides for fines up to $22,200 for individuals and $111,000 for bodies corporate for offences related to customs duty evasion or incorrect declarations. Furthermore, persistent or severe breaches might also lead to criminal charges, which could result in imprisonment, depending on the severity and intent behind the breach.