EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1023926
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.
Stauff Corporation Pty Ltd applied for a TCO in respect of certain stacking bolts on 28 May 2010.
Instrument
TCO No 1023926 was made on 23 August 2010. It declares that those certain stacking bolts 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. 1023926 is taken to have come into force on 28 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 to introduce Tariff Concession Orders (TCOs) under Part XVA, enabling the Chief Executive Officer of Customs to grant tariff concessions on certain imported goods. Enacted by the Parliament of Australia, the 2010 Tariff Concession Instrument No. 1023926 was designed to address the issue of providing preferential tariff rates for goods that are not produced domestically, thereby promoting trade and economic efficiency. Specifically, this instrument responds to applications such as the one made by Stauff Corporation Pty Ltd for stacking bolts, where it was determined that no substitutable goods were produced in Australia. As a result, the TCO No. 1023926 reduced the duty rate from 5% to free, effective from the date of application, 28 May 2010. The policy objective is to support Australian businesses by reducing import costs for goods not locally manufactured, thereby encouraging competition and consumer choice.
Scope and Application
The Tariff Concession Order No. 1023926, made under Part XVA of the Customs Act 1901, applies to specific stacking bolts as determined by the Chief Executive Officer of Customs (CEO). This instrument was initiated by an application from Stauff Corporation Pty Ltd on 28 May 2010, and it became effective on the same date. The order was finalised on 23 August 2010, declaring that the specified stacking bolts are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free, down from the general rate of 5%. The Act allows for individuals or entities to apply for such tariff concessions if certain criteria are met, primarily that no substitutable goods are produced in Australia. The CEO is mandated to make a decision based on these applications, with the order taking effect from the date of application lodging. The CEO must also publish a notice in the Gazette inviting public submissions, although in this case, no submissions were received. The order does not retroactively affect the rights of any person, ensuring that no one, except the Commonwealth, is disadvantaged or imposed liabilities for actions taken before the order's registration.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1023926 are found in sections 269C, 269F, 269P, and 269SJ of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). Section 269C outlines the core criteria that must be met for the CEO to consider a TCO application, including the requirement that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied that the application meets these core criteria, they must make a TCO, as stated in section 269P(3). Section 269SJ specifies the goods that cannot be subject to a TCO. In this case, Stacking Corporation Pty Ltd applied for a TCO for certain stacking bolts, and the CEO was satisfied that no substitutable goods were produced in Australia, thus meeting the core criteria.
The obligations imposed on the parties or entities governed by this Act include the requirement for applicants to ensure their applications for a TCO meet the core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the application day. The CEO is obligated to process the application, make a decision on whether the core criteria are met, and if so, issue a TCO. The CEO is also required to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made. In this instance, the CEO published such a notice but did not receive any submissions. The Act also imposes an obligation on the CEO to ensure that the TCO does not adversely affect the rights of any person other than the Commonwealth and does not impose any liabilities on any person.
The Customs Act 1901 provides for various offences and penalties for breaches of its provisions. While the explanatory statement does not specify the exact penalties for breaches related to TCOs, general penalties under the Act can include fines and imprisonment. For instance, subsection 237(1) of the Act allows for a penalty of up to 10,000 penalty units or imprisonment for five years, or both, for serious breaches such as knowingly importing goods in contravention of the Act. Additionally, section 281 provides for the imposition of pecuniary penalties for less serious breaches, up to 1,100 penalty units. In the context of this TCO, while the specific penalties for non-compliance with the TCO provisions are not detailed, it can be inferred that breaches could lead to similar civil or criminal consequences as outlined in the broader Customs Act provisions.