EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1029026
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.
G H Varley Pty Ltd applied for a TCO in respect of certain lighting systems on 29 June 2010.
Instrument
TCO No 1029026 was made on 29 September 2010. It declares that those certain lighting systems 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. 1029026 is taken to have come into force on 29 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, provides a framework for the regulation of imports and exports within Australia, including the imposition of customs duties. To address gaps in tariff concessions for certain goods, the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This mechanism enables a lower rate of customs duty for goods that meet specific criteria, as outlined in section 269C of the Act, which ensures no substitutable goods are produced in Australia in the ordinary course of business. The policy objective is to promote the efficient production and import of goods that are not domestically produced, thereby benefiting both importers and consumers. G H Varley Pty Ltd's application for a TCO concerning certain lighting systems was approved under these provisions, reflecting the Act's intent to facilitate trade and economic efficiency.
Scope and Application
The Customs Act 1901, through its Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which lower the rate of customs duty on specific goods. This Act applies to individuals and entities seeking a tariff concession for goods imported into Australia, ensuring that these goods are not produced domestically in a manner that would substitute the need for importation. The geographic reach of this Act is national, affecting all states and territories within Australia. The Act excludes certain goods specified under section 269SJ, which cannot be subject to a TCO, and it operates under the condition that no substitutable goods were produced in Australia on the day the application was lodged, as outlined in section 269C. The Act’s application may be extended or restricted by subordinate instruments, but the primary focus remains on ensuring that the tariff concessions are granted appropriately and without imposing any liabilities on individuals or entities, other than the Commonwealth.
Key Provisions
The primary operative sections of this legislation are sections 269C, 269F, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the application is deemed valid, the CEO must determine whether it meets the core criteria set out in section 269C, which involves ensuring that no substitutable goods were produced in Australia on the day the application was lodged. If the application meets these criteria, the CEO must make a written order (a TCO) under section 269P. Section 269S stipulates that the TCO comes into effect on the day the application was lodged.
The Act imposes several obligations on parties applying for a TCO. Firstly, the applicant must ensure their application is valid and not in respect of goods specified in section 269SJ, which excludes certain goods from TCO eligibility. The CEO is required to publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not be made, as per subsection 269K(1). Furthermore, the CEO must assess whether the application meets the core criteria, including verifying that no substitutable goods were produced in Australia at the time of application. Finally, the CEO must make a written TCO if the application satisfies all requirements.
The Act delineates specific offences and penalties for non-compliance with its provisions. Although the explanatory statement does not specify detailed penalties, breaches of customs legislation typically result in civil and criminal consequences. Civil penalties can include fines, and in severe cases, criminal penalties may apply, resulting in imprisonment. The maximum penalties would depend on the specific nature and severity of the breach, as outlined in other sections of the Customs Act 1901 and related regulations. Importers, however, will not be disadvantaged or imposed liabilities for actions taken before the TCO's effective date, as stipulated by the Act.