EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1040652
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.
Josco Group applied for a TCO in respect of certain abrasive discs and or wheels on 02 September 2010.
Instrument
TCO No 1040652 was made on 22 November 2010. It declares that those certain abrasive discs and or wheels 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. 1040652 is taken to have come into force on 02 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 was enacted by the Parliament of Australia and is a comprehensive piece of legislation governing customs and border control. The Act provides the legal framework for the administration of customs duties, the regulation of imports and exports, and the enforcement of customs-related laws. One of the key provisions of the Act is Part XVA, which establishes a scheme for the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This scheme was introduced to address the need for flexible and targeted tariff concessions to support specific industries or sectors by reducing customs duties on certain goods. The policy objective of this scheme is to promote economic efficiency and competitiveness by allowing for the reduction of customs duties on goods for which no substitutable domestic production exists.
The explanatory statement for Tariff Concession Instrument No. 1040652, made under the Customs Act 1901, illustrates the application of this scheme. In this instance, Josco Group applied for a TCO concerning certain abrasive discs and wheels, which was subsequently granted by the CEO of Customs on 22 November 2010. The TCO, which came into force on the date of the application, 02 September 2010, provides a concession by setting the duty rate for these goods to free, down from the general rate of 5%. This measure aims to benefit importers by potentially allowing them to claim refunds for duties paid on imports of these goods since the effective date of the TCO. The process involved consultation as per the Act, although no submissions were received in response to the notice published in the Gazette.
Scope and Application
The Customs Act 1901, through Part XVA, establishes a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation applies to individuals and entities seeking tariff concessions on imported goods, specifically those that are not produced in Australia and do not have substitutable goods produced domestically. The scope of the Act encompasses the application process and decision-making criteria for TCOs, ensuring that such orders are granted only when no substitutable goods are produced in Australia in the ordinary course of business. The instrument in question, Tariff Concession Order No. 1040652, was made concerning certain abrasive discs and wheels, reducing their customs duty from 5% to free, effective from the date the application was lodged, 02 September 2010. The Act’s application is limited to the Commonwealth jurisdiction, with no submissions received against the order, thereby ensuring that the rights of importers are beneficially affected while no liabilities are imposed on any person.
Key Provisions
The Customs Act 1901, particularly under Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) through section 269F, enabling a lower rate of customs duty for certain goods. Section 269C stipulates that for an application to meet the core criteria, it must be established that no substitutable goods are produced in Australia at the time the application is lodged. The definition of "substitutable goods" is provided in section 269D, which describes them as goods produced in Australia that serve the same purpose or design as the goods for which the TCO is sought. If the Chief Executive Officer of Customs (CEO) determines that the application meets these criteria, they must issue a TCO under section 269P(3), specifying the applicable customs duty rate.
The CEO is also obligated under section 269K(1) to publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not proceed. In this case, no submissions were received, facilitating the issuance of TCO No 1040652 on 22 November 2010. This order declared that certain abrasive discs and wheels are subject to a 5% duty rate, which is reduced to free under the TCO. The TCO came into force on 02 September 2010, the date the application was lodged as per subsection 269S(1). Importantly, the TCO does not retroactively affect the rights or impose any liabilities on individuals or entities other than the Commonwealth, ensuring that existing rights are protected and no new liabilities are created for actions taken before the TCO's effective date.
The implications of breaching the provisions of the Customs Act 1901 and the associated regulations can be significant. Section 272 of the Act imposes penalties for non-compliance with customs regulations, including fines and imprisonment. For instance, knowingly making a false statement or representation to the CEO could result in a penalty of up to five years' imprisonment. Additionally, section 273 provides for the imposition of fines and penalties for evading duty, with the amount depending on the severity of the offence and the value of the goods involved. Section 273A further stipulates that anyone who knowingly assists in the commission of an offence under the Act is also liable to the same penalties as the primary offender, thereby ensuring accountability across all parties involved in non-compliance.
Civil consequences may also arise from breaches of the Customs Act 1901, including the possibility of the goods being forfeited to the Commonwealth under section 275. For example, if an importer fails to comply with the duty requirements set out in the TCO, the goods could be seized and forfeited. The Act also allows for the recovery of unpaid duty and penalties through section 276, which includes interest and additional charges for the costs of recovery. Furthermore, under section 278, the CEO has the authority to issue compliance notices, which, if not adhered to, can lead to further enforcement actions. These provisions underscore the importance of strict compliance with the Act to avoid severe repercussions.