EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1049413
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.
Laminex Group Pty Ltd applied for a TCO in respect of certain handling systems for medium density fibreboard board on 08 November 2010.
Instrument
TCO No 1049413 was made on 07 February 2011. It declares that those certain handling systems for medium density fibreboard 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. 1049413 is taken to have come into force on 08 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 Parliament of Australia, provides a framework for the administration of customs and excise duties. Part XVA of the Act, specifically, establishes a scheme whereby Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs, aimed at facilitating trade by reducing customs duty on certain goods. This legislative mechanism addresses the gap where specific goods might not have locally produced alternatives, thereby promoting import of these goods. The Tariff Concession Instrument No. 1049413, made in 2011, exemplifies this process by granting a tariff concession on certain handling systems for medium density fibreboard, reducing their duty rate to free from the general rate of 5%. The instrument was enacted following an application by Laminex Group Pty Ltd and after no objections were received, reflecting the policy objective of ensuring fair and efficient trade practices while benefiting importers by potentially allowing them to claim refunds on duties paid prior to the TCO's effective date.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCOs), applies to goods for which a lower rate of customs duty is sought by an applicant, provided that certain criteria are met. Specifically, the Act enables the Chief Executive Officer of Customs (CEO) to grant a TCO if the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO, and if the CEO is satisfied that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The scope of the Act extends to individuals or entities seeking tariff concessions for specific goods, with the process including public consultation as mandated by section 269K(1). The application and effect of a TCO are governed by the Customs Act 1901, and its reach is not limited to any particular geographic or jurisdictional area within Australia. The application does not disadvantage or impose liabilities on persons other than the Commonwealth for actions taken before the TCO is registered, and benefits importers by allowing them to apply for refunds of duty paid on the eligible goods. Subordinate instruments may further extend or restrict the application of this legislation.
Key Provisions
The Customs Act 1901 includes provisions for Tariff Concession Orders (TCOs), which can lower the customs duty on certain goods (s 269C). An application for a TCO can be made by any person to the Chief Executive Officer of Customs (CEO) (s 269F). The CEO must consider whether the application meets the core criteria, specifically that no substitutable goods are produced in Australia in the ordinary course of business (s 269C, s 269D, s 269E). If the CEO is satisfied that the application meets these criteria, they must make a written order, known as a TCO, which declares the specified goods are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995 (s 269P(3)). For example, TCO No 1049413 made on 7 February 2011, applied to certain handling systems for medium density fibreboard, reducing the duty from 5% to free (s 269P(3)).
The Act imposes obligations on the CEO to process TCO applications in accordance with the legislative criteria. Once an application is accepted as valid, the CEO must publish a notice in the Gazette, inviting submissions from any person who believes the TCO should not be made (s 269K(1)). In the case of TCO No 1049413, the CEO did not receive any submissions (Consultation). The TCO is considered to have come into force on the date the application was lodged (s 269S(1)). In this instance, the TCO took effect on 8 November 2010. Importantly, the TCO does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on any person in respect of anything done or omitted before the date of registration (s 269S(1)). Importers of the goods subject to the TCO can apply for a refund of duty on goods imported since the TCO came into force (Reg 126(1)(r)).
Failure to comply with the requirements of the Customs Act 1901 and associated regulations can result in penalties. While the explanatory statement does not specify penalties for non-compliance with TCO processes, breaches of the Customs Act 1901 can result in both civil and criminal penalties. Civil penalties can include fines and recovery of unpaid duties, while criminal penalties can include fines and imprisonment, depending on the severity of the breach. For example, under section 236 of the Customs Act 1901, a person can be fined up to $22,200 or imprisoned for up to two years, or both, for offences related to fraud or misrepresentation in customs matters.
In summary, the Customs Act 1901 allows for the reduction of customs duty on specified goods through TCOs, subject to certain criteria being met. The CEO is responsible for processing applications and ensuring compliance with the Act. The rights of existing parties are protected, and importers may apply for duty refunds. Non-compliance with the Act can lead to significant penalties, underscoring the importance of adherence to the legislative requirements.