EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1026114
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.
Wesbeam applied for a TCO in respect of certain oriented strand board on 10 June 2010.
Instrument
TCO No 1026114 was made on 10 September 2010. It declares that those certain oriented strand board 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. 1026114 is taken to have come into force on 10 June 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 under which Tariff Concession Orders (TCOs) can be implemented to provide relief from customs duty for certain imported goods. This legislative scheme was introduced to address the need for flexibility in customs duties to support economic efficiency and competitiveness, particularly for goods that are not produced domestically or for which no suitable domestic substitute exists. Tariff Concession Instrument No. 1026114, issued under this Act, specifically grants a concession for certain oriented strand board, lowering the duty rate from the general 5% to free, effective from 10 June 2010, the date the application was lodged. The decision to grant the concession was made after ensuring that no substitutable goods were produced in Australia, aligning with the core criteria set out in the Customs Act 1901. This measure was designed to benefit importers by potentially allowing them to apply for a refund of duty on these goods imported since the effective date of the concession, without imposing any liabilities on third parties.
Scope and Application
The Customs Act 1901, under Part XVA, allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which provide a lower rate of customs duty on specified goods. This legislation applies to any person or entity seeking to import goods into Australia and thereby benefit from reduced customs duties, provided their application meets the core criteria set out in section 269C of the Act. The Act stipulates that a TCO application meets these criteria if no substitutable goods are produced in Australia in the ordinary course of business on the date the application was lodged. The TCO scheme is a Commonwealth-level regulation, and its application is not restricted to any particular state, territory, or region within Australia. Notably, section 269SJ of the Act excludes certain goods from being subject to a TCO. The scope of the Act is further defined and potentially extended through subordinate instruments such as regulations, which can provide additional detail on the application process, eligibility criteria, and enforcement mechanisms. The application of this legislation is transparent and consultative, as the CEO must publish a notice in the Gazette inviting submissions from any interested parties before making a decision on a TCO application. In the specific case of TCO No. 1026114, which was made in respect of certain oriented strand board, the CEO determined that no substitutable goods were produced in Australia, and thus the application was approved.
Key Provisions
The main operative sections of this legislation involve the process by which a Tariff Concession Order (TCO) may be made, including the criteria that must be met for such an order to be valid. Specifically, section 269C (1) of the Customs Act 1901 stipulates that a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. The definition of key terms such as ‘goods produced in Australia’, ‘ordinary course of business’, and ‘substitutable goods’ are provided in sections 269D, 269E, and 269F of the Act respectively. Once the Chief Executive Officer (CEO) of Customs is satisfied that an application meets these criteria, they are required under section 269P(3) to make a written TCO.
The Act imposes specific obligations on the CEO of Customs. Firstly, upon receiving a valid application for a TCO, the CEO must publish a notice in the Gazette, as per section 269K(1), inviting any interested parties to submit any reasons why the TCO should not be made. The CEO must then consider any submissions received before making a decision on the application. In the case of TCO No. 1026114, no submissions were received. Additionally, section 269S(1) of the Act mandates that a TCO is to be taken as coming into force on the day the application for the TCO was lodged.
Breach of the provisions of the Customs Act 1901 can result in various civil and criminal consequences. While the specific offences and penalties are not detailed in the explanatory statement, it is known that the Act provides for enforcement actions against those who do not comply with its provisions. For example, section 269M of the Act provides that an application for a TCO can be rejected if it is deemed not to be in the public interest, and section 269N allows for the review of a decision by the CEO regarding a TCO application. Failure to adhere to the terms of a TCO, once issued, could also lead to penalties under the Customs Act, which might include fines or other civil remedies.
The Tariff Concession Order No. 1026114, made on 10 September 2010, exemplifies the application of these provisions. Wesbeam applied for a TCO concerning certain oriented strand board, and the CEO was satisfied that no substitutable goods were produced in Australia on the day of the application. Consequently, a TCO was issued, reducing the duty on these goods from the general rate of 5% to free. The TCO came into effect on 10 June 2010, the date of the application, and it does not affect any rights or impose any liabilities on any person in respect of anything done or omitted before the date of registration. Importers of these goods can apply for a refund of duty paid since the effective date of the TCO.