EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1037732
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.
Barrier Reef Tyre Castings applied for a TCO in respect of certain used tyres on 13 August 2010.
Instrument
TCO No 1037732 was made on 08 November 2010. It declares that those certain used tyres 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. 1037732 is taken to have come into force on 13 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 Australian Parliament, establishes a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders provide a lower rate of customs duty on certain goods, and are intended to address economic inefficiencies by allowing duty-free entry of goods for which no suitable Australian-made alternatives exist. Instrument No. 1037732, issued under this Act, grants a TCO to Barrier Reef Tyre Castings for specific used tyres, reducing their duty from the general rate of 5% to zero, effective from 13 August 2010. The issuing of this TCO followed a process that included public consultation, although no submissions were received in response to the notice published in the Gazette. The objective of this instrument is to support the import of these tyres without imposing any new liabilities or disadvantaging existing rights, while potentially benefiting importers by allowing them to seek duty refunds for imports made since the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the Chief Executive Officer (CEO) of Customs to issue Tariff Concession Orders (TCOs) that apply lower rates of customs duty to certain goods. The application process for a TCO is governed by section 269F of the Act, which mandates that the CEO must assess if the application for tariff concessions meets the core criteria stipulated in section 269C. This involves determining whether substitutable goods are produced in Australia in the ordinary course of business, as defined in sections 269D and 269E. Notably, certain goods are explicitly excluded from TCO eligibility under section 269SJ. If the CEO finds that the core criteria are met, they are required to issue a written TCO under section 269P(3), specifying the prescribed tariff item applicable to the goods in question. The process also includes a mandatory publication in the Gazette to invite any objections, though no submissions were received for Tariff Concession Order No. 1037732, which pertains to specific used tyres, and came into effect on 13 August 2010. This TCO ensures that the general rate of duty, which would otherwise be 5%, is set to free for these particular goods, thereby benefiting importers who can apply for duty refunds for imports since the TCO's effective date.
Key Provisions
The main operative sections of the Customs Act 1901, as amended by Tariff Concession Instrument No. 1037732, involve the establishment of Tariff Concession Orders (TCOs) which can reduce the rate of customs duty on certain goods. Section 269F of the Act allows individuals to apply for a TCO in relation to specific goods, provided these goods are not listed in section 269SJ, which excludes certain goods from TCO eligibility. Section 269C stipulates that a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. Additionally, section 269P(3) mandates that if the CEO is satisfied the application meets the criteria, a written order (TCO) must be made, declaring the goods subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties it governs primarily revolve around the application process and the conditions for TCO eligibility. An applicant must ensure that their application for a TCO is made in accordance with section 269F and that the goods in question do not fall under the exclusions listed in section 269SJ. The CEO, on receiving an application, must follow the process outlined in sections 269C and 269P, making a written order if the core criteria are satisfied. This includes ensuring that the goods are not substitutable by any produced in Australia on the application date and publishing a notice in the Gazette inviting submissions from interested parties as required by section 269K(1).
In terms of breaches and penalties, the Act does not specify particular offences or penalties for failing to comply with the TCO requirements. However, any misuse or fraudulent application for a TCO could potentially lead to legal action under other sections of the Customs Act 1901 or related legislation. The TCO itself does not impose any liabilities on any person, ensuring that it does not disadvantage or impose penalties on any party other than the Commonwealth, as stipulated in section 126(1)(r) of the Regulations. The primary consequence of non-compliance would be the denial of the tariff concession, thereby subjecting the goods to the standard customs duty rates.