EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1103437
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.
Dematic Pty Ltd applied for a TCO in respect of certain storage and retrieval system on 21 January 2011.
Instrument
TCO No 1103437 was made on 18 April 2011. It declares that those certain storage and retrieval system 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. 1103437 is taken to have come into force on 21 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 was amended with the introduction of Tariff Concession Orders (TCOs) under Part XVA to address the issue of imposing customs duties on goods for which no suitable domestic alternatives exist. Enacted by the Parliament of Australia, this legislation allows the Chief Executive Officer of Customs to reduce or eliminate customs duties on specified goods, provided certain criteria are met. The policy objective behind this measure is to encourage the efficient use of resources and to protect Australian industries from unfair competition by ensuring that tariffs are only imposed when necessary. The explanatory statement for Tariff Concession Instrument No. 1103437, made on 18 April 2011, illustrates this process by detailing the application and subsequent approval of a TCO for certain storage and retrieval systems by Dematic Pty Ltd.
Scope and Application
The Tariff Concession Instrument No. 1103437, issued under the Customs Act 1901, applies to specific goods, in this instance, certain storage and retrieval systems. This instrument is enacted to provide relief from the general customs duty rate, which is typically 5%, by granting a concession that effectively makes the duty rate free for these specified goods. The application of this concession is confined to the particular goods that meet the criteria outlined in the Customs Act 1901, and it is the Chief Executive Officer of Customs who has the authority to make such decisions based on the eligibility of the goods under the Tariff Concession Orders (TCO) scheme. The application process and decision-making are governed by stringent criteria, ensuring that the concession is only applied when no substitutable goods are produced in Australia and other conditions are met. The scope of the legislation is national, operating under the Commonwealth's authority, and it does not disadvantage any existing rights or impose new liabilities on individuals or entities except for the Commonwealth. The commencement of the tariff concession is retroactive to the date of the application, 21 January 2011, allowing for potential duty refunds for importers of the affected goods since that date.
Key Provisions
The Customs Act 1901, through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs), which allow for lower rates of customs duty on specified goods. Section 269F permits individuals to apply to the Chief Executive Officer of Customs (CEO) for a TCO for goods, provided these goods do not fall under the exclusions outlined in section 269SJ. When an application is deemed valid and not restricted by section 269SJ, the CEO assesses whether it meets the core criteria, as defined by section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. Sections 269D and 269E further define "goods produced in Australia" and "ordinary course of business" respectively, while section 269E defines "substitutable goods" as those that could be produced in Australia and serve a similar function to the goods in question. If these criteria are met, the CEO issues a written TCO under section 269P(3), specifying the applicable item from Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on parties and entities involve ensuring that any application for a TCO is made in accordance with the provisions of the Act. The CEO is obligated to publish a notice in the Gazette inviting submissions on the application, as per subsection 269K(1). The CEO must also ensure that the TCO does not affect the rights of any person as at the date of registration, as stipulated in subsection 269S(1). This means that the rights of importers, who can apply for a refund of duty on goods imported since the TCO's effective date, are positively affected. Moreover, the TCO does not impose any liabilities on any person, as clarified in the explanatory statement.
Failure to comply with the Act's provisions or the terms of a TCO may result in legal consequences. Although the explanatory statement does not detail specific offences or penalties, breaches of the Customs Act 1901 can typically result in civil or criminal penalties. Civil penalties may include fines, while criminal penalties could involve imprisonment, depending on the severity and nature of the breach. The exact penalties would be determined by the relevant sections of the Customs Act 1901 and any other applicable legislation, but they can be substantial, reflecting the seriousness of non-compliance with customs regulations.