EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1040551
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.
Plaza Home Imports applied for a TCO in respect of certain stripping and brackets hanging tracks on 01 September 2010.
Instrument
TCO No 1040551 was made on 29 November 2010. It declares that those certain stripping and brackets hanging tracks 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. 1040551 is taken to have come into force on 01 September 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 for the regulation of customs and excise duties. Among its provisions, Part XVA introduces the mechanism for Tariff Concession Orders (TCOs), allowing for reduced customs duty rates on specified goods. This legislative tool was introduced to address the need for targeted tariff reductions that support specific industries or goods that are not domestically produced. The objective of this mechanism is to encourage trade and industry development by reducing the cost burden on imported goods, thereby making them more competitive in the market. TCOs are made by the Chief Executive Officer of Customs, who assesses applications against certain criteria, ensuring that the concessions do not undermine the production of substitutable goods in Australia. This approach aims to balance the interests of importers and domestic producers while fostering economic growth through strategic tariff adjustments.
Scope and Application
The Tariff Concession Order (TCO) No. 1040551 applies to Plaza Home Imports and concerns certain stripping and brackets hanging tracks, providing them with a lower rate of customs duty than the general rate, which is 5%. This order is part of the Customs Act 1901, specifically under Part XVA, and is made by the Chief Executive Officer of Customs, who must be satisfied that the application meets the core criteria, including that no substitutable goods are produced in Australia. The application of the TCO is effective from 1 September 2010, the date the application was lodged, and it does not retroactively affect the rights of any person, including the Commonwealth, with respect to anything done or omitted before its registration. The TCO allows Plaza Home Imports to benefit from a duty-free rate for the specified goods.
The TCO does not extend to goods specified in section 269SJ of the Customs Act 1901, which are ineligible for tariff concessions. Additionally, the CEO published a notice in the Gazette inviting any interested parties to lodge submissions against the TCO, but no submissions were received. The scope of the TCO is limited to the goods specifically mentioned in the order, and it does not impose any liabilities on any person. The CEO is required to make a written order under section 269P(3) if satisfied that the TCO application meets the core criteria, and the TCO is subject to the Customs Tariff Act 1995, with item 50 of Schedule 4 being applicable to the goods in question.
Key Provisions
The Customs Act 1901, as amended by Tariff Concession Instrument No. 1040551, establishes a framework for the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs). These orders apply lower rates of customs duty to specified goods, contingent on meeting certain criteria (s 269F). An application for a TCO can be made by any person under section 269F, but it must not be for goods prohibited by section 269SJ. The CEO must assess whether the application meets the core criteria, primarily by determining if there are no substitutable goods produced in Australia in the ordinary course of business (s 269C). The definitions of "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the application satisfies these criteria, the CEO must issue a TCO specifying the applicable tariff item (s 269P(3)).
The obligations under the Act require the CEO to act on valid TCO applications by making a written order if the core criteria are met. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties on why the TCO should not be made (s 269K(1)). For the TCO in question, concerning certain stripping and brackets hanging tracks, Plaza Home Imports applied on 1 September 2010. After verifying that no substitutable goods were being produced in Australia, the CEO issued TCO No. 1040551 on 29 November 2010, applying item 50 of Schedule 4 to the Customs Tariff Act 1995, which sets the duty rate at free instead of the general rate of 5%.
The Act and the accompanying TCO impose specific obligations on parties involved. The CEO must rigorously verify the application against the core criteria, ensuring there are no substitutable goods produced in Australia. Importers who benefit from the TCO can apply for duty refunds on goods imported since the TCO's effective date, as per paragraph 126(1)(r) of the Regulations. The TCO itself does not impose any new liabilities on individuals or entities; it merely modifies the duty rate for specified goods.
Breaches of the provisions in the Customs Act 1901, including improper applications or misuse of the TCO, may result in penalties. While the explanatory statement does not specify the exact penalties, breaches of customs regulations can generally lead to substantial fines and potential criminal charges. The severity of penalties can depend on the nature and extent of the breach, and may include imprisonment, fines, or both. Importers or other parties found to be abusing the concessions provided by the TCO could face additional scrutiny and enforcement actions.