EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1051310
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.
Adoco Aust Department of Defence applied for a TCO in respect of certain protective containers and retaining wall blocks on 17 November 2010.
Instrument
TCO No 1051310 was made on 07 February 2011. It declares that those certain protective containers and retaining wall blocks 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. 1051310 is taken to have come into force on 17 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 was amended with the introduction of Part XVA, which established a scheme for the creation of Tariff Concession Orders (TCOs) to address a gap in the customs duty regime. The Act allows the Chief Executive Officer of Customs to make these orders, which apply a lower rate of customs duty to specific goods. The 2011 Tariff Concession Instrument No. 1051310, enacted by the Australian Government, provides a practical example of this scheme in action. In this instance, Adoco Aust Department of Defence applied for and was granted a TCO for certain protective containers and retaining wall blocks, effective from 17 November 2010. The policy objective of this instrument was to facilitate the importation of these goods at a reduced duty rate of 0%, down from the standard 5%, by ensuring that no substitutable goods were produced in Australia at the time of application. This legislative measure thus aims to support specific industries by reducing the financial burden of customs duties on necessary imported materials.
Scope and Application
The Customs Act 1901, under its Part XVA, facilitates the issuance of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs, which applies a lower rate of customs duty on specified goods. This concession is available to any person or entity that meets the core criteria outlined in the Act, specifically when the goods in question are not substitutable by any produced in Australia and no production is occurring in the ordinary course of business. The TCO applies to the specific goods, such as certain protective containers and retaining wall blocks, as identified by Adoco Aust Department of Defence, and grants them tariff concessions by applying a free rate of duty instead of the general 5% rate. The application and issuance of a TCO are subject to publication in the Gazette, inviting any interested party to submit objections, although in this case, no objections were received. Once an application is lodged, the TCO is considered to come into effect on the date of lodgement. Notably, the TCO does not disadvantage any person or impose liabilities for actions taken prior to its registration.
Key Provisions
The Customs Act 1901, particularly Part XVA, outlines a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) (s 269F). An applicant can request a TCO for specific goods, provided these goods do not fall under the prohibited categories as outlined in section 269SJ. The CEO must evaluate whether the application satisfies the core criteria specified in section 269C. This evaluation hinges on whether, on the date of the application, there were no goods produced in Australia in the ordinary course of business that could substitute the goods in question (s 269B, 269C, 269D, 269E). If the CEO determines that the application meets these criteria, they are required to issue a written TCO order (s 269P(3)).
The obligations imposed by the Act on the CEO include ensuring that applications are assessed against the core criteria and making timely decisions. The CEO must also publish a notice in the Gazette inviting any interested parties to submit objections if they believe a TCO should not be granted (s 269K(1)). If no objections are received, the CEO must proceed with the TCO. This process ensures transparency and allows for any potential concerns to be addressed before a concession is granted.
Failure to comply with the provisions of the Act may lead to legal consequences. While the explanatory statement does not specify the exact penalties for non-compliance, it is understood that breaches could lead to civil or criminal liabilities under Australian law. Typically, such breaches might result in fines, imprisonment, or other penalties as prescribed by the relevant sections of the Customs Act 1901 or other applicable legislation. The exact penalties would depend on the specific nature and severity of the breach.
In summary, the Customs Act 1901, through Part XVA, provides a structured process for issuing TCOs, ensuring that the CEO evaluates applications against specific criteria and considers any public submissions. The TCO mechanism aims to benefit importers by potentially reducing duty rates on specified goods, without imposing new liabilities on any party. However, adherence to the Act's provisions is crucial, as non-compliance may lead to significant legal repercussions.