EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1039638
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 Co applied for a TCO in respect of certain padlock parts on 27 August 2010.
Instrument
TCO No 1039638 was made on 22 November 2010. It declares that those certain padlock parts 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. 1039638 is taken to have come into force on 27 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 Commonwealth Parliament, establishes a framework for managing customs duties, including provisions for Tariff Concession Orders (TCOs) under Part XVA. This legislative instrument aims to address the gap in providing tariff concessions for specific goods, allowing for reduced customs duties where no substitutable goods are produced in Australia. The policy objective is to encourage the import of goods that are not domestically produced, thereby potentially benefiting consumers through lower prices and importers through tariff relief. In line with these objectives, the Chief Executive Officer of Customs (CEO) is empowered to make TCOs, provided the application meets the core criteria outlined in the Act. The CEO's decision is subject to public consultation, as mandated by the Act, although in the case of TCO No. 1039638, no objections were received. This particular TCO, effective from 27 August 2010, granted tariff concessions on certain padlock parts, reducing their duty rate from 5% to free.
Scope and Application
The Tariff Concession Instrument No. 1039638, made under the Customs Act 1901, applies to a specific set of padlock parts for which Locksmith Supplies Co. applied for tariff concessions on 27 August 2010. The instrument was enacted to provide a concession on the customs duty for these particular goods, contingent on the Chief Executive Officer of Customs being satisfied that no substitutable goods were produced in Australia in the ordinary course of business at the time of the application. The concession reduces the general duty rate of 5% to a rate of duty that is free. The instrument’s application is strictly limited to the goods specified in the application, and it does not extend to any other goods or entities unless they meet the same criteria for a Tariff Concession Order. The geographic reach of this Act is national, as it pertains to customs duties within Australia. The Act does not disadvantage any person other than the Commonwealth and does not impose any liabilities on persons other than the Commonwealth in respect of anything done or omitted before the date of registration. Importers of these goods can apply for a refund of duty from the date the TCO is deemed to have come into force. The Act may be extended or restricted by subordinate instruments, although none are specified in the explanatory statement.
Key Provisions
The key operative sections of this legislation revolve around the establishment and implementation of Tariff Concession Orders (TCOs) under Part XVA of the Customs Act 1901 (section 269C, 269F, 269P(3)). A TCO application can be made by a person under section 269F, and if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets the core criteria, they must make a written order declaring that the goods in question are subject to a prescribed rate in Schedule 4 to the Customs Tariff Act 1995. For instance, in TCO No. 1039638, certain padlock parts are declared to be subject to a duty rate of free, instead of the general rate of 5% (section 269P(3)). The CEO must also ensure that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C).
The obligations imposed by the Act on the parties it governs are primarily on the CEO of Customs. The CEO must ensure that any TCO application does not concern goods specified in section 269SJ of the Act, which cannot be subject to a TCO. They must also determine if the application meets the core criteria, including verifying that no substitutable goods were produced in Australia. Upon satisfying these criteria, the CEO must issue a written TCO (section 269C, 269F). Additionally, the CEO is required to publish a notice in the Gazette, inviting any interested parties to submit their views on the application (subsection 269K(1)). This ensures transparency and allows for stakeholder input before a decision is made.
In terms of offences and penalties, the legislation does not explicitly state penalties for breaches. However, the failure to comply with the requirements to properly apply for a TCO or the CEO’s decision-making process could potentially lead to disputes or challenges in court. The TCO itself does not impose any liabilities on any person, ensuring that the rights of importers are beneficially affected and that no existing rights or liabilities are adversely impacted by the order (subsection 269S(1)). Importers can also apply for a refund of duty on goods imported since the TCO is deemed to have come into force (paragraph 126(1)(r) of the Regulations).