EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1051631
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.
Hipac Group Pty applied for a TCO in respect of certain anti-ligature door locks on 23 November 2010.
Instrument
TCO No 1051631 was made on 28 February 2011. It declares that those certain anti-ligature door locks 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. 1051631 is taken to have come into force on 23 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 to introduce the concept of Tariff Concession Orders (TCOs) through Part XVA, enabling the Chief Executive Officer of Customs to provide tariff concessions on certain goods. Enacted by the Australian Parliament, the Act aims to facilitate the import of goods by reducing customs duties where appropriate, thereby supporting trade and economic activities. The explanatory statement for Tariff Concession Instrument No. 1051631, made on 28 February 2011, illustrates the process where the CEO grants a TCO to Hipac Group Pty for certain anti-ligature door locks, setting the duty rate at free, as no substitutable goods were produced in Australia. This instrument effectively lowers the general duty rate of 5% to zero, effective from 23 November 2010, the date the application was lodged. The process ensures that no existing rights or liabilities are adversely affected, and importers can apply for duty refunds from the effective date of the concession.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the process through which Tariff Concession Orders (TCO) can be issued by the Chief Executive Officer of Customs (CEO). These orders are applicable to goods for which a lower rate of customs duty is mandated, provided the goods are not those specified in section 269SJ of the Act as ineligible for such concessions. An application for a TCO can be made by any person, and the CEO assesses the application against the criteria outlined in sections 269C and 269F. The CEO must determine that no substitutable goods are produced in Australia in the ordinary course of business for the application to meet the core criteria. This assessment ensures that the concession does not undermine local production. Once a TCO is granted, it applies retroactively to the date the application was lodged, as stipulated in subsection 269S(1). For instance, Tariff Concession Order No. 1051631, which was issued on 28 February 2011, concerns certain anti-ligature door locks, effectively reducing their duty from 5% to free. The Act does not impose any new liabilities on individuals or entities and preserves existing rights, ensuring that the concessions do not disadvantage those who have already imported the goods before the order's effective date.
Key Provisions
The primary sections of Tariff Concession Instrument No. 1051631 under the Customs Act 1901 (the Act) (section 269P(3)) involve the declaration of certain anti-ligature door locks as goods to which item 50 of Schedule 4 to the Tariff applies, establishing a free rate of duty for these goods. The instrument specifies that these door locks are subject to a lower rate of customs duty as a result of the instrument's provisions. This tariff concession was made after the CEO of Customs determined that no substitutable goods were produced in Australia at the time of the application. This determination aligns with the requirements set out in section 269C of the Act, which mandates that the application must meet core criteria, including the absence of substitutable goods in Australia.
The Act imposes several obligations on the parties involved. Firstly, it requires any person who wishes to apply for a tariff concession order (section 269F) to do so by lodging an application with the CEO of Customs. Once an application is accepted as valid, the CEO must publish a notice in the Gazette (section 269K(1)) inviting submissions from any interested parties who may have reasons to oppose the concession. In this instance, no submissions were received. Furthermore, section 269S(1) stipulates that a tariff concession order comes into effect on the day the application is lodged, which in this case was 23 November 2010. Additionally, section 126(1)(r) of the Regulations allows importers to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force.
Breaching the provisions of the Customs Act 1901 or the associated regulations can lead to various civil and criminal consequences. For instance, knowingly making false statements or providing false information in an application for a tariff concession order can result in criminal penalties, including fines and imprisonment. Specifically, section 278 of the Customs Act provides for a maximum penalty of 2,000 penalty units or imprisonment for five years, or both, for offences related to false statements or information. Additionally, failure to comply with the refund provisions under section 126(1)(r) of the Regulations could also lead to civil penalties, as the Commissioner of Customs may take action to recover any incorrectly paid duties or to impose fines as appropriate.