EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045784
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.
Rehau Pty Ltd applied for a TCO in respect of certain expander tool parts on 11 October 2010.
Instrument
TCO No 1045784 was made on 07 January 2011. It declares that those certain expander tool parts 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. 1045784 is taken to have come into force on 11 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, establishes a framework for administering customs duties, including the ability for the Chief Executive Officer of Customs to grant tariff concession orders (TCOs) under Part XVA. These orders provide for a reduced rate of customs duty on specified goods, provided certain criteria are met. The instrument F2011L00837, namely Tariff Concession Instrument No. 1045784, was introduced to address a specific application from Rehau Pty Ltd for a TCO concerning certain expander tool parts, where it was determined that no substitutable goods were produced in Australia. As a result, the CEO granted the TCO, effective from 11 October 2010, with the general rate of duty on these goods being reduced from 5% to free. The policy objective is to provide tariff relief for goods where no locally produced alternatives exist, thereby encouraging trade and benefiting importers by potentially allowing them to claim refunds for duties paid prior to the TCO's effective date.
Scope and Application
The Tariff Concession Instrument No. 1045784 pertains to the Customs Act 1901, specifically under Part XVA which enables the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs). This legislation applies to any individual or entity that seeks to reduce the customs duty on specific goods by applying for a TCO. The application process necessitates that the goods in question are not listed under section 269SJ of the Act, which excludes certain goods from being subject to a TCO. Furthermore, the application must meet the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business at the time of application. This instrument extends to the national level, impacting trade and customs duties across Australia. Notably, the TCO does not retroactively affect the rights of any person other than the Commonwealth and does not impose any liabilities on individuals or entities other than the Commonwealth. The scope of the TCO is further refined through subordinate instruments, which may specify additional criteria or conditions for the application of tariff concessions.
Key Provisions
The Customs Act 1901, as amended, provides a framework for the imposition of customs duty on imported goods, but it also allows for tariff concessions. Under section 269F (1), an applicant may apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of specific goods. If the application meets the core criteria, the CEO must make a written order declaring that the goods in question are subject to a prescribed rate of duty specified in the order (section 269P(3)). In the case of TCO No. 1045784, certain expander tool parts have been granted a TCO, which means they are subject to a rate of duty of free, as opposed to the general rate of 5% (section 269P(3)).
The Act imposes certain obligations on both the applicant and the CEO. For the applicant, the primary obligation is to ensure that the application is made in good faith and meets the core criteria as outlined in section 269C of the Act. This means that, at the time of application, no substitutable goods should be produced in Australia in the ordinary course of business. For the CEO, the obligations include accepting valid applications, making a decision on whether the application meets the core criteria, and publishing a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)). In this case, no submissions were received, indicating that the application met the criteria without opposition.
Failure to comply with the requirements of the Customs Act 1901 can result in civil or criminal penalties. The Act does not specify particular offences or penalties for breaches related to TCO applications; however, general provisions in the Act may apply to cases of fraud, misrepresentation, or other non-compliance. Penalties for breaches of the Customs Act 1901 can include fines and imprisonment, depending on the severity of the offence. For instance, section 228A of the Act stipulates that a person who knowingly or recklessly makes a false statement in an application for a TCO can be fined up to 10,000 penalty units or imprisoned for up to five years, or both. The Act also allows for civil penalties where appropriate.