EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1032964
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.
Itw Industiral Packaging applied for a TCO in respect of certain hand tools on 19 July 2010.
Instrument
TCO No 1032964 was made on 11 October 2010. It declares that those certain hand tools 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. 1032964 is taken to have come into force on 19 July 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 Parliament of Australia, provides a framework for the administration of customs duties and includes provisions for Tariff Concession Orders (TCOs). These orders, introduced to address the problem of ensuring that certain imported goods are not subject to prohibitive tariffs if no equivalent goods are produced domestically, allow for a lower rate of customs duty on specified goods. The Act empowers the Chief Executive Officer of Customs to make TCOs if they are satisfied that an application meets core criteria, which include the absence of substitutable goods produced in Australia. In response to an application from Itw Industiral Packaging for tariff concessions on certain hand tools, TCO No. 1032964 was issued on 11 October 2010, with the effect that the duty on these goods was set at free, as no substitutable goods were being produced in Australia. The policy objective of this instrument is to support industries by reducing the cost of imported goods where domestic alternatives do not exist, thereby encouraging competition and potentially reducing consumer prices.
Scope and Application
The Tariff Concession Instrument No. 1032964 under the Customs Act 1901 applies to specific hand tools imported into Australia, granting them a concession that reduces the duty from the general rate of 5% to free duty. The Act applies to individuals or entities that import these goods, and the concession is contingent on the Chief Executive Officer of Customs determining that no substitutable goods are produced in Australia. The application of this instrument is national in scope, adhering to the provisions of the Customs Act 1901 and the Customs Tariff Act 1995. The instrument does not apply to goods specified in section 269SJ of the Act, which outlines those goods ineligible for tariff concessions. Additionally, the instrument does not disadvantage or impose liabilities on any person other than the Commonwealth concerning actions taken prior to the registration date. The application process involves the CEO publishing a notice in the Gazette to invite any submissions opposing the concession, though no such submissions were received for this instrument. The instrument comes into effect on the date the application was lodged, in this case, 19 July 2010.
Key Provisions
The main operative sections of this instrument are sections 269C, 269F, 269P, and 269S of the Customs Act 1901. Section 269F allows for an application to be made to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of certain goods. Section 269C sets out the core criteria that the CEO must be satisfied with before a TCO can be made, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P mandates that if the CEO is satisfied with the application, they must make a written order, which is the TCO, and section 269S specifies that the TCO comes into force on the day the application was lodged.
The obligations imposed by this Act on the parties it governs include the requirement for any person who considers there are reasons why a TCO should not be made to lodge a submission with the CEO (subsection 269K(1)). The CEO must publish a notice in the Gazette inviting such submissions as soon as practicable after accepting a TCO application as a valid application. Additionally, the CEO must ensure that the core criteria are met before making a TCO. These provisions ensure that the process is transparent and that all relevant stakeholders have an opportunity to provide input before a TCO is made.
Failure to comply with the provisions of the Customs Act 1901, including the requirements for making a TCO, can lead to civil and criminal consequences. Under section 164 of the Act, a person who contravenes any provision of the Act or the Regulations is liable to a penalty of up to $22,200 for a corporation and $4,440 for an individual. If the contravention is persistent, the penalty for a corporation can be up to $555,000 and for an individual up to $111,000. Additionally, under section 165, a person who is found guilty of an offence against the Act can be subject to imprisonment for up to two years. These penalties underscore the importance of complying with the Act and the potential consequences of non-compliance.
The Tariff Concession Instrument No. 1032964, which was made on 11 October 2010, declares that certain hand tools are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. This means that these hand tools are subject to a rate of duty that is free, as opposed to the general rate of duty of 5%. The instrument specifies that the TCO comes into force on 19 July 2010, the day the application was lodged. Importantly, 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 in respect of anything done or omitted to be done before the date of registration. Instead, it provides a benefit to importers of these goods, who can apply for a refund of duty on goods imported since the TCO came into force.