EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1051947
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.
The Hipac Group Pty applied for a TCO in respect of certain door hinges on 23 November 2010.
Instrument
TCO No 1051947 was made on 28 February 2011. It declares that those certain door hinges 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. 1051947 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 enacted by the Australian Parliament to regulate and control the importation and exportation of goods, ensuring compliance with customs laws and the collection of relevant duties. One aspect of this regulatory framework is the scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs. This scheme was introduced to address the problem of providing tariff relief for certain imported goods that do not have substitutable Australian-produced equivalents, thereby encouraging trade and economic efficiency. As per the explanatory statement for Tariff Concession Instrument No. 1051947, issued on 28 February 2011, the policy objective is to provide tariff concessions where appropriate, facilitating the importation of goods that are not produced domestically and thus supporting the competitive balance within the market. The CEO's decision to grant a TCO is contingent on satisfying the core criteria, including the absence of substitutable Australian-produced goods and the receipt of no objections from interested parties.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This legislative provision enables a lower rate of customs duty for goods that are the subject of a TCO, provided an application is made and approved by the CEO. The Act applies to any person or entity seeking to import goods that could potentially benefit from a tariff concession, provided these goods are not specified in section 269SJ as ineligible for a TCO. The application process requires the CEO to assess whether the goods in question are not being produced in Australia in the ordinary course of business and whether there are no substitutable goods available domestically. Once approved, a TCO grants tariff relief on the specified goods, as evidenced by TCO No. 1051947 concerning certain door hinges, which was effective from the date the application was lodged. The geographic scope of this legislation is national, as it pertains to customs duties throughout Australia. Exclusions are limited to goods specified in section 269SJ, and the Act allows for further specification and amendment through subordinate instruments, thereby extending or restricting its application as necessary.
Key Provisions
The main operative sections of the Customs Act 1901 as they relate to Tariff Concession Orders (TCOs) are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269S. Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the CEO is satisfied that the application meets the core criteria outlined in section 269C, and that the goods do not fall under the exclusions specified in section 269SJ, they must then proceed to make a written order (section 269P(3)). This order will apply a lower rate of customs duty to the specified goods, as defined by the relevant item in Schedule 4 of the Customs Tariff Act 1995. The TCO is considered to have come into force on the day the application was lodged (section 269S(1)).
The Customs Act 1901 imposes specific obligations on both the applicant and the CEO of Customs. The applicant must ensure that their TCO application is made in good faith and that the goods in question meet the criteria for a concession, specifically that no substitutable goods are produced in Australia at the time of the application (section 269C). The CEO, upon receiving a valid application, must consider whether the application meets the core criteria, consult with relevant stakeholders if necessary, and make a written order if the criteria are satisfied. The CEO is also required to publish a notice in the Gazette inviting any interested parties to submit objections to the TCO, although no submissions were received in this instance (subsection 269K(1)).
In the event of a breach of the provisions within the Customs Act 1901 concerning TCOs, there are both civil and criminal consequences. Civil penalties can include fines, while criminal penalties can include imprisonment, depending on the nature and severity of the breach. The maximum penalties for breaches of the Customs Act are detailed in the Customs (Prohibited Imports) Regulations 1956. These can range from fines to imprisonment, with the specific penalties varying based on the type and extent of the infringement. For example, false statements or omissions in an application for a TCO can result in significant fines and/or imprisonment terms as stipulated in the relevant regulations.