EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045276
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.
Phoenix Outdoor applied for a TCO in respect of certain fuel pump handpiece product displays on 06 October 2010.
Instrument
TCO No 1045276 was made on 23 December 2010. It declares that those certain fuel pump handpiece product displays 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. 1045276 is taken to have come into force on 06 October 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, serves as a comprehensive framework governing the regulation of imports and exports within Australia. Among its provisions, Part XVA establishes a mechanism for Tariff Concession Orders (TCOs), which allow for the reduction of customs duties on specific goods under certain conditions. This legislative provision was introduced to address the need for a structured process to grant tariff concessions, facilitating trade by reducing the financial burden on importers. The instrument in question, Tariff Concession Instrument No. 1045276, was issued on 23 December 2010, in response to an application by Phoenix Outdoor for tariff concessions on certain fuel pump handpiece product displays. The policy objective, as stated in the explanatory statement, was to ensure that the application met the core criteria set forth in the Act, namely that no substitutable goods were produced in Australia at the time of application. The instrument was designed to come into effect on the date the application was lodged, thereby providing immediate benefit to importers by setting the duty rate at zero, as opposed to the general rate of 5%.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the procedures for Tariff Concession Orders (TCOs) which are issued by the Chief Executive Officer of Customs (the CEO). These orders apply to goods specified in the application, provided the application meets the core criteria set out in the Act. A TCO applies a lower rate of customs duty to goods that are subject to the order, contingent upon the CEO determining that no substitutable goods are produced in Australia in the ordinary course of business. The application process requires the applicant to submit their request to the CEO, who then assesses whether the application is valid and meets the criteria, including that the goods are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. If the application is approved, the CEO issues a TCO, specifying the applicable customs duty rate. The application of TCOs is subject to consultation, requiring the CEO to publish a notice in the Gazette and invite submissions from interested parties, though no submissions were received for TCO No 1045276. This TCO applies to specific fuel pump handpiece product displays and was made effective from the date the application was lodged, providing a duty-free rate for these goods as no substitutable goods were produced in Australia. The application of the TCO does not affect pre-existing rights or impose liabilities on persons other than the Commonwealth.
Key Provisions
The Tariff Concession Instrument No. 1045276 under the Customs Act 1901 (section 269F) outlines the process and conditions under which the Chief Executive Officer of Customs (CEO) can grant Tariff Concession Orders (TCOs) for specific goods. When an individual or entity applies for a TCO, the CEO must first confirm that the goods in question are not those listed in section 269SJ of the Act, which are ineligible for TCOs. If the application is valid, the CEO then assesses whether the application meets the core criteria set out in section 269C of the Act, which requires that no substitutable goods are being produced in Australia at the time of application. This assessment involves determining whether 'substitutable goods' are produced in Australia, as defined in section 269D, and if they are produced in the 'ordinary course of business' as per section 269E. If these criteria are satisfied, the CEO is required to issue a TCO under section 269P(3) of the Act.
The obligations imposed by this legislation on the parties involved are quite specific. The applicant must ensure that their TCO application is made in accordance with the provisions of the Customs Act 1901 and that all required information is accurately and fully provided. The CEO is obligated to review the application, assess whether it meets the core criteria, and if so, issue a TCO. Additionally, upon accepting a valid TCO application, the CEO must publish a notice in the Gazette inviting any interested parties to submit any objections or reasons why the TCO should not be granted. In the case of TCO No. 1045276, no objections were received.
The Act also sets out potential consequences for non-compliance or breaches of the terms set by the TCO. While the explanatory statement does not specify particular offences or penalties, the Customs Act 1901 generally provides for civil and criminal penalties for breaches of customs regulations. These can include fines and imprisonment for criminal offences, as well as financial penalties for civil breaches. For example, under section 250 of the Customs Act 1901, individuals or entities found guilty of fraudulent activity related to customs duty can face fines of up to $22,200 and/or imprisonment for up to five years. Additionally, section 283 of the Act allows for civil penalties where a person is found to have contravened any provision of the Act, with penalties up to $22,200 for individuals and significantly higher for corporations.