EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1049064
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.
Musicway Corporation Ltd. applied for a TCO in respect of certain computer hard drive cases on 04 November 2010.
Instrument
TCO No 1049064 was made on 24 January 2011. It declares that those certain computer hard drive cases 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. 1049064 is taken to have come into force on 04 November 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, establishes a framework for the imposition and collection of customs duties and provides mechanisms for tariff concessions. Specifically, Part XVA of the Act enables the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) to lower customs duty rates on certain goods. This legislative provision was introduced to address the need for tariff reductions on goods where there is no domestic production of substitutable goods, thereby supporting industries that rely on imported components. Instrument No. 1049064, issued under the authority of the Customs Act 1901, grants a tariff concession to Musicway Corporation Ltd. for certain computer hard drive cases, effective from 4 November 2010. The concession, which reduces the duty rate from 5% to free, was granted as no substitutable goods were produced in Australia at the time of application. The process involved publishing a notice in the Gazette inviting objections, none of which were received. This instrument exemplifies the policy objective of facilitating trade by reducing the cost of importing specific goods, thereby benefiting importers and potentially stimulating economic activity within affected sectors.
Scope and Application
The Customs Act 1901 applies to individuals and entities involved in the importation of goods into Australia. Specifically, the Act facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) which provide for reduced or free customs duty on certain goods. This legislation impacts importers of goods by potentially reducing the duty they are required to pay on specified items. The Act applies on a national level across Australia, governed by the Commonwealth. The Act excludes certain goods from being subject to a TCO, as outlined in section 269SJ of the Act. Additionally, the Act provides for the application process to be supplemented by subordinate instruments, such as regulations, which may further define the scope and specifics of the TCOs. In the case of TCO No. 1049064, the CEO made an order in respect of certain computer hard drive cases, declaring them to be subject to a free rate of duty, effective from the date the application was lodged.
Key Provisions
The key provisions of the Customs Act 1901, particularly those relevant to Tariff Concession Orders (TCOs), include section 269F (2) which allows an individual or entity to apply for a TCO for certain goods. The Chief Executive Officer of Customs (CEO) then assesses the application against the core criteria outlined in section 269C. These criteria require that on the date the application is lodged, no substitutable goods are produced in Australia in the ordinary course of business (sections 269C and 269D). Once the CEO is satisfied that the application meets these criteria, they must issue a written order (section 269P(3)), which is a TCO, declaring the goods to which a specific item of Schedule 4 to the Customs Tariff Act 1995 applies. In the case of Musicway Corporation Ltd., a TCO was made on 24 January 2011, and it declared that certain computer hard drive cases are subject to item 50 of Schedule 4 to the Tariff, with a duty rate of free instead of the general rate of 5%.
The Act imposes several obligations on the parties involved. The CEO must ensure that applications are assessed against the criteria of section 269C and must make a written order if the criteria are met. The applicant must ensure that their application is valid and meets the core criteria. Moreover, under subsection 269K(1), the CEO is required to publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made. This ensures transparency and provides an opportunity for public consultation. In this instance, the CEO did not receive any submissions in response to the published notice.
Breaching the requirements set out in the Customs Act 1901 may have various civil and criminal consequences. While the specific penalties for breaches are not detailed in the explanatory statement, the Act generally provides for penalties for non-compliance with customs regulations. These can include fines, imprisonment, or both, depending on the nature and severity of the breach. The maximum penalties can vary significantly based on the specific provisions of the Act and the circumstances of the breach. It is important for entities and individuals to comply with the requirements to avoid these potential consequences.