EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045650
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.
Klingspor Australia applied for a TCO in respect of certain abrasive grain cloth rolls on 08 October 2010.
Instrument
TCO No 1045650 was made on 07 January 2011. It declares that those certain abrasive grain cloth rolls 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. 1045650 is taken to have come into force on 08 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 Commonwealth Parliament, governs the administration of customs duties and the importation of goods into Australia. The Act includes provisions for Tariff Concession Orders (TCOs), which provide reduced customs duty rates on certain goods under specific conditions. The primary objective of Part XVA of the Act is to facilitate the application process for TCOs, ensuring that the importation of goods can be made more cost-effective when no substitutable goods are produced domestically. Klingspor Australia's application for a TCO concerning abrasive grain cloth rolls, which was subsequently granted on 7 January 2011, exemplifies the practical application of these provisions. The TCO allows for these specific goods to benefit from a zero rate of customs duty, as no equivalent products are manufactured in Australia, thereby enhancing the competitiveness of these imports. This legislative framework aims to support economic efficiency and fair trade practices by addressing potential gaps in domestic production and import costs.
Scope and Application
The Customs Act 1901 applies to individuals and entities seeking to import goods into Australia and is administered by the Chief Executive Officer of Customs (CEO). Under Part XVA of the Act, the CEO can make Tariff Concession Orders (TCO) which lower the rate of customs duty on specific goods. The TCO applies to goods for which an application is made, and which are not specified in section 269SJ of the Act as ineligible for tariff concessions. The TCO scheme extends across the Commonwealth of Australia, impacting the importation process for those who apply for and are granted concessions. The explanatory statement for TCO No. 1045650, made in respect of certain abrasive grain cloth rolls, indicates that the CEO must determine that no substitutable goods were produced in Australia in the ordinary course of business before a concession can be granted. This TCO was effective from the date of application, 08 October 2010, and it does not retroactively disadvantage or impose liabilities on any person, while potentially allowing for duty refunds for importers of the specified goods.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1045650 under the Customs Act 1901 (section 269P(3)) include provisions for the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (section 269F). These sections specify that a TCO can be issued when the CEO determines that an application meets the core criteria, which involves establishing that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). The TCO in question (section 269P(3)) declares that certain abrasive grain cloth rolls are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, resulting in a reduced rate of customs duty from 5% to free.
The obligations imposed by the Act on the parties or entities it governs include the requirement for applicants to meet the core criteria for a TCO, which entails demonstrating that no substitutable goods were produced in Australia on the date of application (section 269C). The CEO is obligated to decide whether the application meets these criteria and, if satisfied, to make a written TCO (section 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not be made (subsection 269K(1)). The Act also requires that the TCO not affect the rights of any person adversely, except for the Commonwealth, and does not impose any new liabilities (subsection 269S(1)).
Any breach of the provisions in the Customs Act 1901 could lead to civil or criminal consequences. For example, failure to comply with the requirements of a TCO, such as inaccurately classifying goods or making false statements in an application, could result in penalties. The maximum penalties for customs-related offences can include substantial fines and, in some cases, imprisonment, depending on the severity and intent of the breach. The Act does not specify maximum penalties for TCO breaches but refers to general penalties under the Customs Act 1901, which can include fines of up to $22,200 for individuals and $111,000 for corporations, as well as potential imprisonment terms. These penalties underscore the importance of adhering to the statutory requirements and obligations set out in the Act.