EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1038858
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.
Locksmith Supplies Coy applied for a TCO in respect of certain door sets on 23 August 2010.
Instrument
TCO No 1038858 was made on 17 November 2010. It declares that those certain door sets 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. 1038858 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 Customs Act 1901 was enacted by the Parliament of Australia to provide a framework for the regulation of customs and excise, and to facilitate international trade. Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which provide for lower rates of customs duty on specified goods. This is intended to promote trade by reducing costs for importers and ensuring competitive pricing. TCO No. 1038858 was introduced on 17 November 2010 in response to an application from Locksmith Supplies Coy for tariff concessions on certain door sets. The policy objective of this instrument is to ensure that these goods are subject to a free rate of duty, rather than the general rate of 5%, provided that no substitutable goods are produced in Australia. The TCO was effective from 23 August 2010, the date the application was lodged, and no submissions opposing the TCO were received during the consultation period.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation applies to any person or entity seeking a reduction in customs duty for goods that are not being produced in Australia in the ordinary course of business. The geographic reach of this Act is national, applying throughout Australia, and it does not differentiate between states, territories, or the Commonwealth. A TCO can be applied for in respect of goods, provided they do not fall under the exclusions listed in section 269SJ of the Act. The Act further specifies that a TCO application meets core criteria if, at the time of application, no substitutable goods are produced domestically. The application process involves the CEO assessing the application against these criteria and, if satisfied, issuing a TCO that specifies the goods and the applicable rate of customs duty. The Explanatory Statement for TCO No. 1038858, made on 17 November 2010, provides an example where the CEO granted a concession on certain door sets, reducing the duty rate from 5% to free, effective from the date of the application on 23 August 2010. This concession does not affect any existing rights or liabilities of persons other than the Commonwealth, and importers can apply for duty refunds on imports made since the effective date of the TCO.
Key Provisions
The main sections of the Customs Act 1901 pertinent to Tariff Concession Orders (TCOs) include sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the application meets the core criteria set out in section 269C, which includes the condition that no substitutable goods were produced in Australia in the ordinary course of business as per sections 269B and 269D, the CEO must make a written order declaring that the goods are subject to a prescribed rate of duty specified in Schedule 4 to the Customs Tariff Act 1995. Section 269P(3) outlines the requirement for the CEO to issue a TCO if satisfied that the application meets the core criteria. Section 269SJ specifies the goods that cannot be subject to a TCO.
The obligations imposed by the Act on the parties or entities it governs include the requirement for the CEO to assess applications for TCOs and ensure they meet the core criteria. The CEO must also publish a notice in the Gazette inviting submissions from any person who considers that there are reasons why the TCO should not be made. Additionally, section 269S(1) requires that a TCO be taken to have come into force on the day on which the application for the TCO was lodged. The CEO must ensure that the rights of a person are not adversely affected by the TCO as at the date of registration, and must consider the rights of importers to apply for a refund of duty on goods imported since the TCO came into force.
The Customs Act 1901 also imposes specific consequences for breaches of the Act's provisions. If a person knowingly or negligently contravenes the Act, they may face civil or criminal penalties. The maximum penalties for such breaches can include substantial fines and, in some cases, imprisonment. The exact penalties depend on the nature and severity of the breach, and are determined by the relevant courts. The Act ensures that the rights of all parties are protected and that any adverse impacts on non-Commonwealth persons are avoided, while also providing mechanisms for the imposition of penalties for non-compliance.