EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1102613
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.
Thermaguard Company applied for a TCO in respect of certain fire blankets on 18 January 2011.
Instrument
TCO No 1102613 was made on 12 April 2011. It declares that those certain fire blankets 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. 1102613 is taken to have come into force on 18 January 2011.
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 Commonwealth Parliament, provides the framework for managing customs duties in Australia. One of the mechanisms under this Act is the Tariff Concession Order (TCO), which allows for reduced customs duties on certain imported goods under specific conditions. The Customs Act 1901 was amended to include the ability to make TCOs in order to address economic disparities and support industries that are not adequately represented within Australia’s domestic market. Tariff Concession Instrument No. 1102613 was introduced to provide a lower rate of customs duty on certain fire blankets, recognising that no equivalent product was being produced domestically, thereby allowing these goods to enter the market more competitively. The instrument was made in response to an application by Thermaguard Company and was effective from 18 January 2011.
Scope and Application
The Tariff Concession Instrument No. 1102613, which was made under Part XVA of the Customs Act 1901, applies to goods that are the subject of a Tariff Concession Order (TCO). Specifically, this instrument applies to certain fire blankets, which are declared as goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. The application of a TCO allows for a lower rate of customs duty on these goods, in this case, reducing the duty from the general rate of 5% to a rate of free. The Act enables any person to apply for a TCO provided that the goods in question do not fall under the exclusions set out in section 269SJ of the Act. The Chief Executive Officer of Customs (CEO) is responsible for deciding whether an application meets the core criteria, which are defined in sections 269C, 269D, and 269E of the Act. The CEO must make a written order if satisfied that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The instrument’s effect is to confer benefits to importers by allowing them to apply for a refund of duty on goods imported since the TCO is taken to have come into force, without imposing any liabilities on any person. The instrument does not affect the rights of any person (other than the Commonwealth) as at the date of registration in a way that would disadvantage them or impose liabilities for actions taken before the registration date.
Key Provisions
The Customs Act 1901 provides for the making of Tariff Concession Orders (TCOs) under section 269F, which allow for a lower rate of customs duty on specified goods. An application for a TCO can be made by any person, and if the Chief Executive Officer (CEO) of Customs determines that the application meets the core criteria (section 269C), they must make a written order. For instance, TCO No. 1102613, made on 12 April 2011, applies to certain fire blankets, which are now subject to a free rate of duty as opposed to the general rate of 5% (section 269P(3)). The TCO came into force on the date the application was lodged, which was 18 January 2011 (subsection 269S(1)). It is noteworthy that this order does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on any person (subsection 269S(2)).
Entities governed by the Customs Act 1901, such as importers and exporters, must ensure compliance with the Act and any TCOs made under it. Importers, in particular, benefit from the TCO as they may apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations). The CEO has a duty to publish a notice in the Gazette inviting submissions from interested parties once a TCO application is accepted as valid (subsection 269K(1)). However, in the case of TCO No. 1102613, no submissions were received. This underscores the importance of thorough consultation and consideration of the implications of TCOs for all stakeholders.
Failure to comply with the provisions of the Customs Act 1901 or the terms of a TCO may result in civil or criminal consequences. The specific penalties for breaches are not detailed in the explanatory statement, but the Act and associated regulations provide for various sanctions. Civil penalties may include fines or pecuniary penalties, while criminal penalties could encompass imprisonment, depending on the nature and severity of the breach. The exact penalties would be determined based on the relevant provisions of the Customs Act 1901 and any applicable regulations or subsidiary legislation. It is imperative for all parties involved to adhere to the requirements set out in the Act to avoid these potential consequences.