EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1107178
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.
Premier Auto Trade applied for a TCO in respect of certain distributors on 24 February 2011.
Instrument
TCO No 1107178 was made on 09 May 2011. It declares that those certain distributors 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. 1107178 is taken to have come into force on 24 February 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 Australian Parliament, introduced a scheme whereby Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. These orders are designed to lower the rate of customs duty on specified goods, provided certain criteria are met. Specifically, a TCO can be issued if no substitutable goods are produced in Australia in the ordinary course of business. This measure aims to promote trade by making imported goods more competitive with locally produced alternatives. The process involves an application by an interested party, review by the CEO, and potential publication in the Gazette to allow for public submissions. The Tariff Concession Instrument No. 1107178, made under this Act, illustrates the application of these provisions by granting a concession for certain distributors, reducing their duty rate from 5% to free, effective from the date the application was lodged. This instrument came into force on 24 February 2011, with no submissions against it and no imposition of new liabilities on persons other than the Commonwealth.
Scope and Application
The Customs Act 1901, as extended through Tariff Concession Instrument No. 1107178, applies specifically to goods that are the subject of a Tariff Concession Order (TCO), which in this instance are certain distributors. The Act allows for the application of a lower rate of customs duty on these goods if a TCO is issued by the Chief Executive Officer of Customs (CEO) when satisfied that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The application of this instrument is national, extending across Australia under Commonwealth jurisdiction. The TCO does not affect the rights of any person other than the Commonwealth and does not impose any new liabilities on individuals or entities. The rights of importers are positively impacted as they can apply for a refund of duty on these goods imported since the TCO was taken to have come into force, which is 24 February 2011. There are no exclusions or exemptions specified within the Act that would restrict the application of this TCO, though the Act does exclude certain goods from being subject to a TCO altogether as per section 269SJ.
Key Provisions
The main operative sections of this legislation concern the creation and enforcement of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). The Chief Executive Officer of Customs (CEO) is responsible for making these orders, which apply a lower rate of customs duty to specific goods, provided that certain criteria are met (section 269C). For instance, TCO No. 1107178 applies to certain distributors, declaring that they are subject to a 5% duty rate, which is free under the TCO. The CEO must ensure that the application for a TCO does not relate to goods specified in section 269SJ and that no substitutable goods were produced in Australia on the day the application was lodged (section 269SJ, section 269C).
The Act imposes several obligations on the parties involved. The CEO must decide whether an application meets the core criteria by confirming that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged (section 269C). Additionally, the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes there are reasons why the TCO should not be made to lodge a submission (subsection 269K(1)). The CEO is also required to make a written TCO if the application meets the core criteria (subsection 269P(3)). In this specific case, Premier Auto Trade applied for a TCO on 24 February 2011, and the CEO was satisfied that no substitutable goods were produced in Australia, leading to the creation of TCO No. 1107178 on 9 May 2011.
Failure to comply with the provisions of the Customs Act 1901 and associated regulations can result in various consequences. The Act does not specify particular offences, but non-compliance with the TCO requirements could lead to disputes over the applicability of customs duties, potentially resulting in financial penalties or legal action. For example, if a party fails to apply for a TCO where applicable, they may be liable for the higher customs duty rates. The maximum penalties for breaches of the Customs Act 1901 can be substantial, including fines and imprisonment, depending on the severity of the breach. However, the specific penalties are not detailed in this explanatory statement. The rights of importers are beneficially affected by the TCO, and they can apply for a refund of duty on goods imported since the day the TCO came into force.