EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1047742
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.
Blucher Australia Pty Ltd applied for a TCO in respect of certain tube or pipe fittings on 26 October 2010.
Instrument
TCO No 1047742 was made on. 24 January 2011 It declares that those certain tube or pipe fittings 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. 1047742 is taken to have come into force on 26 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, provides a framework for the administration of customs duties and includes provisions for Tariff Concession Orders (TCOs) to grant tariff relief on certain goods. The Act was introduced to address the need for flexibility in tariff rates to support economic activities, particularly in cases where no local substitutes are available. The Tariff Concession Instrument No. 1047742, made under the authority of the Customs Act, specifically addresses the application by Blucher Australia Pty Ltd for tariff concessions on certain tube or pipe fittings. The instrument was developed after the CEO of Customs was satisfied that no substitutable goods were produced in Australia, thereby meeting the core criteria outlined in section 269C of the Act. This concession results in a reduction of the duty rate from 5% to free, effective from the date the application was lodged, 26 October 2010. The instrument aims to benefit importers by allowing them to apply for a refund of duties paid on these goods since the effective date, without imposing any new liabilities on persons other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the application for Tariff Concession Orders (TCO) which allow for reduced customs duty rates on specified goods. This legislative framework applies to any person or entity seeking a concession on customs duty for goods not produced in Australia and not listed in section 269SJ, which excludes certain goods from TCO eligibility. The application process involves submitting a request to the Chief Executive Officer of Customs (CEO), who then assesses whether the application meets the core criteria outlined in section 269C of the Act, particularly ensuring that no substitutable goods are produced in Australia. If the CEO is satisfied that the application meets these criteria, they must make a TCO, as evidenced by TCO No. 1047742 for certain tube or pipe fittings, which were granted a duty-free status effective from the date of application, 26 October 2010. This legislation operates on a national level within the Commonwealth of Australia and does not impose any liabilities on persons other than the Commonwealth. Importantly, the TCO does not retroactively affect any pre-existing rights or impose liabilities for actions taken prior to its registration.
Key Provisions
The Tariff Concession Instrument No. 1047742, made under the Customs Act 1901, is a specific order that provides a tariff concession for certain tube or pipe fittings. Section 269P(3) of the Act details the process whereby the Chief Executive Officer (CEO) of Customs must make a written order if satisfied that the application for a tariff concession order (TCO) meets the core criteria. In this case, the CEO was satisfied that no substitutable goods were produced in Australia, as per section 269C, and therefore, the order was made to declare that the specified fittings are subject to a zero rate of duty instead of the general rate of 5% (section 269P(3)). The TCO applies to the date the application was lodged, 26 October 2010, and does not affect any pre-existing rights or liabilities, except to provide a benefit to importers who may apply for a duty refund (subsection 269S(1), paragraph 126(1)(r) of the Regulations).
The obligations imposed by this TCO primarily affect importers and the CEO of Customs. Importers must ensure that they are aware of the tariff concessions available and may apply for a refund of duty for goods imported since the TCO was taken to have come into force (subsection 269S(1), paragraph 126(1)(r)). The CEO, on the other hand, must follow the process outlined in the Act to assess applications for TCOs and make orders where the criteria are met (section 269P(3)). Furthermore, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties regarding the proposed TCO (subsection 269K(1)). In this instance, no submissions were received, which likely facilitated the prompt issuance of the TCO.
Failure to comply with the requirements of the Customs Act 1901 or the Tariff Concession Instrument can result in civil or criminal consequences. Under section 168 of the Customs Act, any person who knowingly or recklessly makes a false statement in an application for a tariff concession order may be subject to a civil penalty of up to $22,200 or a criminal penalty of up to two years imprisonment, or both. Additionally, any person who imports goods and fails to declare them or who fraudulently understates the value of goods for the purpose of evading duty may face penalties as outlined in the Act, including significant fines and imprisonment. The exact penalties depend on the value of the goods and the degree of intent behind the offence.