EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1052014
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.
Lincoln Sentry applied for a TCO in respect of certain wood filler kits on 26 November 2010.
Instrument
TCO No 1052014 was made on 28 February 2011. It declares that those certain wood filler kits 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. 1052014 is taken to have come into force on 26 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 Parliament of Australia to establish a regulatory framework for customs duties, border controls, and trade regulations. It provides the authority for the creation of Tariff Concession Orders (TCOs) under Part XVA, which are designed to provide reduced rates of customs duty on specific goods, provided certain criteria are met. Tariff Concession Instrument No. 1052014 was introduced to address a specific gap by reducing the customs duty on certain wood filler kits to zero, as no substitutable goods were produced in Australia at the time of the application. The instrument was made to provide tariff concessions to Lincoln Sentry, following an application under section 269F of the Act, and was effective from 26 November 2010. The Chief Executive Officer of Customs was satisfied that the application met the core criteria, and no objections were raised during the consultation period. The policy objective is to facilitate trade by reducing customs duties on specific goods where appropriate, benefiting importers by potentially allowing them to claim refunds for duties paid on those goods prior to the effective date of the TCO.
Scope and Application
The Customs Act 1901, under Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at applying lower rates of customs duty to specified goods. This concession is available to individuals or entities that apply for a TCO in relation to goods that meet the core criteria, specifically where no substitutable goods are produced in Australia in the ordinary course of business. A TCO can only be applied for goods not listed in section 269SJ of the Act, which excludes certain goods from this concession. The application process involves a review by the CEO to determine if the goods specified in the application are not substitutable with any goods produced in Australia. Upon a positive determination, the CEO issues a written TCO, which specifies the applicable lower rate of duty from the Customs Tariff Act 1995. The instrument, TCO No. 1052014, relates to certain wood filler kits and was made effective from the date of the application, 26 November 2010, with the rate of duty on these goods set at free, as opposed to the general rate of 5%. This legislative instrument does not impose any new liabilities or adversely affect the rights of any person as of the date of the concession, while providing potential benefits to importers who can apply for duty refunds on imports since the effective date of the TCO.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1052014, made under the Customs Act 1901, are sections 269C, 269P, and 269S, which respectively outline the core criteria for approving a Tariff Concession Order (TCO) application, the process for the Chief Executive Officer (CEO) of Customs to make a TCO, and the commencement date of the TCO. Specifically, section 269C of the Act requires that, on the day the application is lodged, no substitutable goods are produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets these core criteria, section 269P mandates the CEO to issue a written order, the TCO, which declares that the goods specified in the application are subject to a prescribed tariff item. The TCO is deemed to have come into effect on the date the application was lodged, as per section 269S.
The obligations and requirements imposed by the Act on parties such as the CEO of Customs and applicants for a TCO include the necessity for the CEO to publish a notice in the Gazette inviting submissions from interested parties if they believe there are reasons why the TCO should not be made. Additionally, applicants must ensure their applications meet the core criteria, such as demonstrating that no substitutable goods are being produced in Australia on the date the application is made. The CEO has a duty to assess these applications against these criteria and make an informed decision on whether to issue a TCO.
The Act also outlines the potential consequences for non-compliance with the provisions of the TCO or the Customs Act 1901. While the Explanatory Statement does not detail specific penalties for breaches related to TCOs, the Customs Act 1901 and associated regulations generally provide for both civil and criminal penalties for non-compliance. These can include fines and, in serious cases, imprisonment. The specific penalties would depend on the nature and severity of the breach. For example, section 238 of the Customs Act 1901 may apply to breaches involving fraudulent behaviour, leading to fines of up to $22,200 or imprisonment for up to two years, or both, for individuals, and higher penalties for bodies corporate.
Under the Customs Tariff Act 1995, the TCO No. 1052014 effectively reduces the duty on certain wood filler kits from 5% to free, provided that no substitutable goods are produced in Australia. The instrument also ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO is deemed to have come into force. This provision is crucial for ensuring that importers are not disadvantaged by the tariff changes and can receive appropriate compensation for any duties paid prior to the TCO's effective date.