EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1026596
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.
Master Instruments Pty Ltd applied for a TCO in respect of certain accumulators on 15 June 2010.
Instrument
TCO No 1026596 was made on 06 September 2010. It declares that those certain accumulators 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. 1026596 is taken to have come into force on 15 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 Australian Parliament, provides a framework for the regulation of imports and exports, including the imposition of customs duties. One of the mechanisms within this Act is the Tariff Concession Order (TCO), which allows for the reduction or elimination of customs duties on specific goods. This is particularly beneficial for goods that are not produced in Australia or for which there are no substitutable goods produced domestically. The Explanatory Statement for Tariff Concession Instrument No. 1026596 outlines the process by which the Chief Executive Officer of Customs assesses and grants tariff concessions, ensuring that such concessions do not disadvantage existing Australian producers. This instrument was introduced to address the problem of ensuring fair trade practices and supporting industries by providing duty relief on certain imported goods where no domestic alternatives exist, thereby aligning with the policy objective of promoting competitive and efficient markets.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the Chief Executive Officer (CEO) of Customs to issue Tariff Concession Orders (TCOs), which lower the rate of customs duty on certain goods. These orders apply to any goods that are the subject of an application made to the CEO, provided they do not pertain to the specific goods listed in section 269SJ of the Act that cannot be subject to a TCO. The application process requires that the goods are not produced in Australia in the ordinary course of business and are not substitutable by locally produced goods. The CEO is mandated to make a written order if the application meets these core criteria. The TCO applies to the Commonwealth, and the geographic scope is not restricted to a particular state or territory, thereby having a national reach. The commencement of a TCO is effective from the day the application is lodged, and it does not affect the rights of any person adversely or impose any liabilities on them in respect of actions taken before the order's registration. The Explanatory Statement also notes that the CEO published a notice in the Gazette inviting submissions against the TCO, but none were received.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1026596 are sections 269C, 269F, and 269P(3) of the Customs Act 1901. Section 269F allows for the application of a Tariff Concession Order (TCO) by a person to the Chief Executive Officer of Customs (CEO), provided the goods in question are not specified in section 269SJ. The CEO must then decide whether the application meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, they must make a written order declaring that the goods in question are subject to a lower rate of customs duty as specified in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed on parties or entities by this Act primarily involve the process of applying for and receiving a TCO. The CEO must assess the application and determine if it meets the core criteria, including verifying that no substitutable goods were produced in Australia on the application date. Additionally, the CEO is required to publish a notice in the Gazette inviting any interested party to submit objections to the TCO. If no objections are received, the CEO must proceed with making the TCO. Importers also have the obligation to apply for a refund of duty for goods imported since the effective date of the TCO.
In terms of offences and penalties, the Customs Act 1901 does not explicitly outline specific criminal or civil penalties for breaches related to the TCO process itself. However, general penalties for breaches of the Customs Act can include fines and imprisonment. For instance, section 224 of the Customs Act stipulates that a person who wilfully makes a false statement or uses false documents in relation to customs matters may be liable to a penalty of up to 10,000 penalty units or imprisonment for up to 10 years, or both. Additionally, the Commissioner of Customs may impose administrative penalties for non-compliance with customs-related obligations.
The process of making a TCO is designed to ensure that the application is assessed fairly and transparently, with opportunities for interested parties to voice their concerns. The rights of importers are protected by allowing them to apply for duty refunds on goods imported after the TCO comes into force. Any potential liabilities are explicitly excluded for persons other than the Commonwealth, ensuring that the TCO does not disadvantage or impose new liabilities on importers or other stakeholders.