EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045922
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.
Cumi Australia applied for a TCO in respect of certain ceramic tiles on 12 October 2010.
Instrument
TCO No 1045922 was made on 07 January 2011. It declares that those certain ceramic tiles 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. 1045922 is taken to have come into force on 12 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 was enacted to provide for the regulation of the importation and exportation of goods, among other purposes. Specifically, the Act establishes a scheme under which Tariff Concession Orders (TCOs) may be made to apply lower rates of customs duty to certain goods. This legislative framework aims to provide tariff relief to businesses that import goods that are not produced domestically, thus supporting industry competitiveness and consumer access to a wider range of products. Enacted by the Australian Parliament, the Act addresses the gap in tariff regulation by providing a formal process for businesses to apply for tariff concessions on specific goods, ensuring a fair and transparent application process overseen by the Chief Executive Officer of Customs. The policy objective behind the establishment of TCOs is to encourage the import of goods that are not locally manufactured, thereby benefiting consumers and businesses by reducing costs and enhancing product availability.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes the framework for Tariff Concession Orders (TCOs), which provide lower rates of customs duty on certain goods. This Act applies to individuals and entities that are involved in the importation of goods that may be eligible for tariff concessions, provided such goods are not specified in section 269SJ of the Act, which lists goods ineligible for TCOs. The application process for a TCO involves submitting an application to the Chief Executive Officer of Customs, who must then determine if the application meets the core criteria as outlined in section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business. If the application is approved, a TCO is issued, granting a lower duty rate on the specified goods. The instrument applies across Australia, governed by Commonwealth law, and its reach is defined by the scope of goods eligible for tariff concessions. The commencement date of the TCO is the date on which the application is lodged, and it does not retroactively affect the rights of any person other than the Commonwealth, nor does it impose any liabilities on individuals or entities. This legislation can extend its application through subordinate instruments, which may provide further detail on the types of goods eligible for TCOs and the specific criteria for determining eligibility.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1045922 (TCO No. 1045922) under the Customs Act 1901 require that applications for tariff concession orders (TCOs) be submitted to the Chief Executive Officer (CEO) of Customs (section 269F). The CEO must assess whether the application meets the core criteria outlined in section 269C, which necessitates that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged (section 269P(3)). If the CEO determines that the application satisfies these criteria, they must issue a written TCO (section 269P(3)). TCO No. 1045922, issued on 7 January 2011, applies to certain ceramic tiles, declaring that these goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, thereby setting the duty rate at free instead of the general rate of 5%.
The obligations imposed by the Customs Act 1901 on the parties governed by TCO No. 1045922 include the requirement for applicants to ensure that their applications for TCOs are made in accordance with the Act's stipulations and that they provide all necessary information to enable the CEO to assess the application against the core criteria. The CEO is obligated to assess each application meticulously, publish notices in the Gazette inviting submissions from interested parties, and make a decision on whether to issue a TCO based on the criteria set out in section 269C. Additionally, once a TCO is issued, the CEO must ensure that the provisions of the TCO are properly communicated and that any relevant stakeholders are informed of the changes to duty rates.
Failure to comply with the requirements of the Customs Act 1901 or the conditions of a TCO may lead to various consequences. The Act does not explicitly outline specific offences or penalties for non-compliance with TCOs, but breaches of customs regulations generally can result in civil or criminal penalties. The maximum penalties for customs offences can include substantial fines and, in some cases, imprisonment. The exact penalties depend on the nature and severity of the breach. For instance, knowingly making a false statement or document in connection with a TCO application could result in a fine of up to $22,000 or imprisonment for up to two years, or both, under section 279 of the Customs Act 1901. Additionally, failure to pay the correct duty rate as per a TCO could lead to financial penalties and interest charges on the unpaid duty.