EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045305
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.
Hills Industries applied for a TCO in respect of certain childrens playground equipment on 06 October 2010.
Instrument
TCO No 1045305 was made on 07 January 2011. It declares that those certain childrens playground equipment 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. 1045305 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, outlines a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This legislation was introduced to address the problem of ensuring that certain goods, which are not produced domestically, can be imported at a reduced customs duty rate if they meet specific criteria. This mechanism supports economic efficiency and competitiveness by allowing businesses to access imported goods at a lower cost, provided no domestic substitute is available. In line with the policy objective of fostering trade and economic growth, Tariff Concession Instrument No. 1045305 was introduced to provide tariff concessions for certain children's playground equipment, reducing the duty rate from 5% to free. This particular TCO was effective from 6 October 2010, the date on which the application was lodged, and no submissions were received opposing the order.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a scheme for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to lower the rate of customs duty on certain goods. This legislation applies to individuals or entities who may apply for a TCO for goods that meet specific criteria, ensuring no substitutable goods are produced in Australia at the time of application. The scope of this Act is national, given its Commonwealth jurisdiction, and it extends to any person who submits an application for a TCO, provided the goods in question are not specified in section 269SJ, which excludes certain goods from TCO eligibility. The application process requires the CEO to assess whether the application meets the core criteria, as outlined in sections 269C and 269D, before a written order is issued. This TCO mechanism can be further refined or extended through subordinate instruments, which may specify additional conditions or criteria for TCO applications. The geographic reach of the TCO is national, impacting all importers of the specified goods across Australia.
Key Provisions
The primary sections of this legislation, particularly section 269F, allow a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) regarding specific goods. If the application is not for goods prohibited under section 269SJ, the CEO must assess whether it meets the core criteria, defined in section 269C. A TCO application satisfies the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions of terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets the core criteria, they must make a written order (TCO) declaring that the goods subject of the TCO application are goods to which a specified item in Schedule 4 of the Customs Tariff Act 1995 applies.
The obligations under this Act primarily concern the CEO, who must ensure that a TCO application meets the core criteria as defined. This involves verifying that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who considers there are reasons why the TCO should not be made to lodge a submission. Once the CEO is satisfied that the application meets the core criteria, they must make a written TCO.
Failure to comply with the provisions of the Act could lead to potential consequences. Although the Act does not explicitly state offences or penalties for breach, the implications of not following the prescribed procedures could include invalidity of the TCO, resulting in the standard customs duty rate applying to the goods instead of the reduced rate. Importers may also face difficulties in obtaining duty refunds if the TCO is not correctly applied. Furthermore, the CEO could face scrutiny or legal challenges if they fail to properly assess an application or ignore valid submissions made during the consultation period.
In summary, this legislation outlines the process for applying for and obtaining a TCO, with specific obligations placed on the CEO to ensure the process is followed correctly. While the Act does not explicitly state penalties for non-compliance, the potential consequences include the imposition of standard customs duty rates and difficulties in obtaining duty refunds for importers. Ensuring that the core criteria are met and following the consultation process are crucial to avoid these outcomes.