EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1038857
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.
Sumikin Bussan Oceania applied for a TCO in respect of certain bars on 23 August 2010.
Instrument
TCO No 1038857 was made on 22 November 2010. It declares that those certain bars 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. 1038857 is taken to have come into force on 23 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 Tariff Concession Order No. 1038857 was enacted as part of the Customs Act 1901, addressing the issue of customs duty rates on specific imported goods. This particular legislation aims to provide tariff concessions by granting a lower rate of customs duty on goods that are subject to a Tariff Concession Order (TCO). The instrument was made by the Chief Executive Officer of Customs under section 269F of the Customs Act 1901, upon determining that the application for a TCO met the necessary core criteria, specifically that no substitutable goods were produced in Australia at the time the application was lodged. This order directly benefits importers by reducing the duty rate on certain bars to zero, as opposed to the general rate of 5%, provided that no objections were raised and none were received following the publication of the application in the Gazette. This legislative measure is intended to support the economic viability of imported goods by mitigating the financial burden of customs duties.
Scope and Application
The Tariff Concession Instrument No. 1038857, made under Part XVA of the Customs Act 1901, applies specifically to certain bars for which Sumikin Bussan Oceania sought a Tariff Concession Order (TCO) from the Chief Executive Officer of Customs (CEO). The TCO applies to the goods specified in the order, providing them with a reduced customs duty rate of free, as opposed to the general rate of 5%. The application of the TCO is contingent on the CEO being satisfied that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The geographic reach of this legislation is national, as it pertains to the application of the Customs Act 1901 across Australia. The TCO does not extend to goods specified in section 269SJ of the Act, which outlines those goods that cannot be subject to a TCO. Any exclusions or exemptions from the application of the TCO would be determined by the CEO in accordance with the criteria set out in section 269C of the Act. The application and implementation of the TCO may be further extended or restricted through subordinate instruments, as permitted by the Customs Act 1901.
Key Provisions
The Customs Act 1901, specifically under Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). These TCOs apply a reduced rate of customs duty to certain goods. Section 269F allows a person to apply to the CEO for a TCO concerning specific goods. If the CEO determines that the application pertains to goods not listed in section 269SJ, which outlines goods ineligible for TCO, they must assess whether the application meets the core criteria set out in section 269C. This provision stipulates that an application meets the core criteria if, on the day the application was submitted, no substitutable goods were produced in Australia in the ordinary course of business. The terms 'goods produced in Australia,' 'ordinary course of business,' and 'substitutable goods' are further defined in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets these criteria, they must issue a written order under subsection 269P(3) declaring that the goods in question are subject to a specific tariff item listed in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed by the Customs Act on parties applying for a TCO involve ensuring that the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business. The CEO is required to publish a notice in the Gazette, inviting any interested parties to submit reasons why the TCO should not be granted, as per subsection 269K(1). If no submissions are received, the CEO must proceed with issuing the TCO. The TCO comes into effect on the day the application is lodged, as per subsection 269S(1). This means that once an application is accepted, the concessional tariff treatment is retroactive to the date of application submission.
In the case of Tariff Concession Order No. 1038857, issued on 22 November 2010, Sumikin Bussan Oceania applied for a TCO concerning certain bars on 23 August 2010. The CEO was satisfied that no substitutable goods were produced in Australia, leading to the issuance of the TCO which applied item 50 of Schedule 4 to the Tariff. This meant the general rate of duty on these goods, which was 5%, was reduced to free. Importers of these goods can apply for a refund of duty on goods imported since the TCO's effective date, as per paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not affect the rights of any person other than the Commonwealth, nor does it impose any liabilities on any person for actions taken prior to the TCO's registration.
The Customs Act imposes penalties and consequences for non-compliance with the provisions regarding TCOs. While the explanatory statement does not detail specific offences or penalties, breaches of customs regulations generally can lead to civil and criminal penalties. Civil penalties may include fines, while criminal penalties can result in imprisonment. The exact penalties depend on the nature and severity of the breach, as outlined in other sections of the Customs Act and related regulations.