EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1043416
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.
IBIC International applied for a TCO in respect of certain cement impregnated canvas on 22 September 2010.
Instrument
TCO No 1043416 was made on 20 December 2010. It declares that those certain cement impregnated canvas 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. 1043416 is taken to have come into force on 22 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, includes provisions for Tariff Concession Orders (TCOs) under Part XVA. This part of the Act was introduced to address the need for a mechanism through which the Chief Executive Officer of Customs could reduce customs duty rates on specific goods, provided certain conditions were met. Specifically, the Act allows for the application of a lower rate of customs duty on goods that are the subject of a TCO, contingent on the absence of substitutable goods produced in Australia. The objective of the TCO scheme is to promote trade by making imported goods more competitive with locally produced alternatives, without disadvantaging existing rights or imposing new liabilities on individuals or entities.
Scope and Application
The Customs Act 1901, under Part XVA, provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that apply lower rates of customs duty to specified goods. The Act applies to any person or entity that seeks to import goods and benefit from the reduced duty rates provided by a TCO. This mechanism is designed to encourage the importation of goods that are not produced domestically, thereby supporting market access and potentially lowering consumer prices. The geographic reach of the Act is national, as it pertains to the importation of goods into Australia. The Act excludes certain goods specified in section 269SJ from being subject to a TCO, and it mandates that no substitutable goods should be produced in Australia for the goods in question. The application process requires the CEO to assess the core criteria, which include the absence of substitutable goods produced in Australia, before a TCO can be issued. The instrument in question, TCO No 1043416, applies to certain cement impregnated canvas, and the duty rate for these goods has been set to free, effective from the date the application was lodged.
Key Provisions
The main operative sections of this legislation include sections 269C, 269F, 269K, 269P, and 269S of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. If the CEO is satisfied that the application meets the core criteria specified in section 269C, they must make a written order declaring that the goods are to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. Section 269K requires the CEO to publish a notice in the Gazette, inviting submissions on the TCO application. The CEO must consider any submissions received before making a decision. Section 269S specifies that a TCO comes into force on the day on which the application for the TCO was lodged.
The Customs Act 1901 imposes several obligations on the CEO and any person applying for a TCO. The CEO must determine if the application meets the core criteria, which includes ensuring that no substitutable goods were produced in Australia in the ordinary course of business. The person applying for a TCO must provide sufficient information to demonstrate that the goods are eligible for the concession. Upon acceptance of a valid TCO application, the CEO must publish a notice in the Gazette and consider any submissions received. The TCO must be made in writing and specify the item of the Customs Tariff Act 1995 to which the goods apply.
Breaching the requirements of the Customs Act 1901 can result in penalties. For example, making a false or misleading statement in an application for a TCO may constitute an offence. The maximum penalty for an individual is 12 months imprisonment or a fine of $11,000, or both. For a body corporate, the maximum penalty is $55,000. Additionally, if a person fails to comply with a TCO or provides false information to the CEO, they may face civil or criminal consequences. The Act does not specify the exact penalties for these breaches, but they can include fines or other legal actions.
In summary, the Customs Act 1901 provides a framework for the CEO to grant tariff concessions on certain goods through TCOs. The Act outlines the application process, core criteria for approval, and obligations for both applicants and the CEO. Failure to comply with the Act can result in penalties, including fines and imprisonment for individuals, and fines for bodies corporate. The rights of importers will be beneficially affected, allowing them to apply for refunds of duty on goods imported since the TCO came into force.