EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1035707
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.
Eastern Equity B2X Corporation Pty Ltd applied for a TCO in respect of certain heating and cooling air conditioners on 4 August 2010.
Instrument
TCO No 1035707 was made on 1 November 2010. It declares that those certain heating and cooling air conditioners 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.1035707 is taken to have come into force on 4 August 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, established a framework for the application of customs duties and other charges on imported goods. The Act was intended to regulate the import and export of goods to ensure that the government could collect necessary revenue and protect local industries. The Customs Act 1901 provided the basis for the creation of Tariff Concession Orders (TCOs), which can be applied for by individuals or corporations to reduce the customs duty on specific goods, provided certain criteria are met. The Tariff Concession Instrument No. 1035707 was introduced to address the need for concessional tariff treatment for certain heating and cooling air conditioners, aiming to support the importation of these goods by reducing the duty rate from the general 5% to free, thus encouraging the availability and affordability of these products in the Australian market. The instrument was made under the authority granted by the Customs Act 1901 and was designed to facilitate trade while maintaining the protective measures necessary for local industries.
Scope and Application
The Customs Act 1901, specifically through Part XVA, establishes a framework whereby Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act applies to any person or entity seeking a tariff concession for specified goods, where the application complies with the criteria set out in the Act. These criteria require that on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. The geographic reach of this legislation is national, applying across all states and territories within Australia. The Act does not specify exclusions, but it explicitly states that certain goods, outlined in section 269SJ, cannot be subject to a TCO. The application of the Act can be extended or restricted through subordinate instruments, which may include regulations that provide further details on the application process and criteria for tariff concessions. The TCO in question, No. 1035707, pertains to certain heating and cooling air conditioners and came into force on the date the application was lodged, which is 4 August 2010.
Key Provisions
The main operative sections of this legislation (sections 269C, 269F, 269P(3), and 269K(1)) outline the process for making Tariff Concession Orders (TCO) under the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning certain goods. If the CEO is satisfied that the application meets the core criteria specified in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged, a TCO is to be made. This TCO declares that the specified goods are subject to a lower rate of duty, in this case, free of duty as per item 50 of Schedule 4 to the Customs Tariff Act 1995. Once a TCO application is accepted as valid, the CEO must publish a notice in the Gazette, inviting any interested parties to submit objections (section 269K(1)). If no objections are received, the TCO comes into effect on the date the application was lodged (section 269S(1)).
The obligations and requirements imposed by this Act primarily concern the CEO of Customs. The CEO must ensure that any application for a TCO is assessed against the core criteria set out in section 269C. This involves verifying that no substitutable goods were produced in Australia on the date the application was lodged. If the CEO determines that the application meets these criteria, a TCO must be issued in writing. Additionally, the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application, providing an opportunity for interested parties to object. This ensures transparency and fairness in the TCO process.
Breaching the provisions of the Customs Act 1901 can result in both civil and criminal consequences. Under section 16DD of the Customs Act, a person who contravenes a provision of the Act is liable to a penalty. For corporations, the maximum penalty is 10,000 penalty units, which currently equates to AUD 10 million. For individuals, the maximum penalty is 2,000 penalty units, or AUD 2 million. Additionally, offences related to the fraudulent use of a TCO, such as falsely claiming eligibility for tariff concessions, can result in criminal charges. These penalties underscore the importance of compliance with the legislative requirements and the potential legal repercussions for non-compliance.
In summary, the Customs Act 1901, through Tariff Concession Orders, provides a mechanism for lowering customs duties on specified goods, provided no substitutable goods are produced in Australia. The CEO of Customs plays a crucial role in assessing applications and issuing TCOs, while ensuring the process is transparent and open to public scrutiny. Compliance with the Act is essential, with significant penalties for breaches, reinforcing the importance of adhering to the legislative requirements.