EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1039461
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.
Wagner Spraytech Australia applied for a TCO in respect of certain paint spraying systems on 26 August 2010.
Instrument
TCO No 1039461 was made on 22 November 2010. It declares that those certain paint spraying systems 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. 1039461 is taken to have come into force on 26 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 through which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs) that provide lower rates of customs duty on specified goods. The 2010 Tariff Concession Instrument No. 1039461, made under the authority of the Customs Act, was introduced to address a specific need identified by Wagner Spraytech Australia regarding the importation of certain paint spraying systems. The instrument aims to ensure that such goods are subject to a free rate of duty, rather than the general 5% rate, by confirming that no substitutable goods were produced in Australia at the time of the application. The policy objective behind this concession is to support Australian businesses by ensuring they have access to necessary imported goods without the burden of high customs duties, thereby facilitating fair competition and potentially lowering costs for end-users.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to persons or entities seeking a reduction in customs duty on specific goods through the application process outlined in section 269F. The legislation ensures that a TCO can be granted if, on the date of application, no substitutable goods are produced in Australia in the ordinary course of business, as per sections 269C and 269D. The scope of the Act extends to all Commonwealth jurisdictions, with no exclusions other than those specified in section 269SJ, which details goods that cannot be subject to a TCO. The TCOs themselves can be further defined and applied through subordinate instruments, such as the one illustrated in Tariff Concession Instrument No. 1039461, which applies to certain paint spraying systems. The geographic reach of this legislation is nationwide, applying equally across all states and territories of Australia. Importantly, the Act ensures that the rights of existing parties are protected, and no new liabilities are imposed, safeguarding the interests of both applicants and other stakeholders.
Key Provisions
The Customs Act 1901 (the Act) enables the Chief Executive Officer of Customs (the CEO) to make Tariff Concession Orders (TCOs) under section 269F. These orders apply a lower rate of customs duty to specific goods, provided the application meets the core criteria outlined in section 269C. If the CEO determines that the application is not in respect of goods that cannot be subject to a TCO, as specified in section 269SJ, the decision hinges on whether the application meets the core criteria. Specifically, a TCO application meets these criteria if, on the day the application is lodged, no substitutable goods are produced in Australia in the ordinary course of business, as defined in sections 269B and 269D.
The obligations imposed by the Act on parties or entities include the requirement for a person to apply to the CEO for a TCO if they wish to benefit from a lower rate of customs duty (section 269F). The CEO must then assess whether the application meets the core criteria, ensuring that no substitutable goods are being produced in Australia (section 269C). Furthermore, the CEO must publish a notice in the Gazette inviting any interested parties to submit any objections to the TCO (subsection 269K(1)). This transparency ensures that the process is open and any potential objections are considered before the TCO is made.
Failure to comply with the requirements of the Act can lead to various consequences. If a TCO is issued improperly, it could be subject to review and potentially invalidated if it does not meet the statutory criteria. Additionally, any party that knowingly or negligently breaches the provisions of the Act could face civil or criminal penalties, depending on the nature and severity of the breach. Although the specific penalties are not detailed in the explanatory statement, breaches of customs regulations generally carry significant financial penalties and, in severe cases, may result in criminal charges.