EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1107341
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.
Wonderest applied for a TCO in respect of certain textile manufacturing plant overhead material handing transporter parts on 25 February 2011.
Instrument
TCO No 1107341 was made on 16 May 2011. It declares that those certain textile manufacturing plant overhead material handing transporter parts 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. 1107341 is taken to have come into force on 25 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, as amended, introduced a mechanism through which Tariff Concession Orders (TCOs) can be issued to provide relief on customs duties for certain goods. Enacted by the Australian Parliament, this legislation allows the Chief Executive Officer of Customs to reduce or eliminate customs duty on goods if specific criteria are met, thereby addressing the gap in providing tariff relief to industries where substitutable goods are not produced domestically. The policy objective of this instrument, as reflected in the explanatory statement for Tariff Concession Instrument No. 1107341, is to ensure that the application process for TCOs is transparent and that affected parties have an opportunity to provide input. In this particular case, Wonderest applied for and was granted a TCO for certain textile manufacturing plant overhead material handling transporter parts, resulting in a reduction of duty from 5% to free. The instrument came into force on the date of application, 25 February 2011, and does not disadvantage any person other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 1107341 applies specifically to goods identified in an application submitted to the Chief Executive Officer of Customs under section 269F of the Customs Act 1901. This Act applies to individuals and entities seeking tariff concessions for goods not produced in Australia and for which no substitutable goods are manufactured domestically. The instrument pertains to those goods for which a Tariff Concession Order (TCO) has been granted, reducing the rate of customs duty to zero for the specified items. The geographic reach of this legislation is national, as it falls under the Commonwealth's jurisdiction, and it applies to all parties involved in the importation of the specified goods into Australia. The application of the Act is restricted to goods that meet the core criteria, notably that no substitutable goods are produced in Australia on the date the TCO application was lodged. The Act excludes any goods specified in section 269SJ of the Customs Act 1901, which outlines the goods that cannot be subject to a TCO. The CEO's decision to grant a TCO is subject to consultation processes, including the publication of notices in the Gazette, inviting public submissions which, in this case, resulted in none being received. The TCO comes into force on the date the application was lodged, in this instance on 25 February 2011. Importantly, the TCO does not affect the rights of any person adversely nor does it impose any liabilities on any person in respect of actions taken before its registration.
Key Provisions
The main operative sections of the Customs Act 1901 (the Act) relevant to Tariff Concession Orders (TCOs) are sections 269C, 269F, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods, provided that the goods are not specified in section 269SJ of the Act. Section 269C stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets the core criteria, section 269P(3) mandates that the CEO must make a written order 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 applies.
The Act imposes several obligations and requirements on the parties involved. Firstly, any person seeking a TCO must submit an application to the CEO under section 269F. The CEO must then determine whether the application meets the core criteria set out in section 269C, which involves ensuring that no substitutable goods are produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets these criteria, the CEO must make a written TCO under section 269P(3). Furthermore, under subsection 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. In the case of TCO No. 1107341, no submissions were received in response to this invitation.
The Act does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach in the context of TCOs. However, the implications of not complying with the requirements of the Act can be significant. For instance, if a TCO is made in error, it could result in the government losing revenue due to the reduced rate of customs duty on the specified goods. Additionally, if the CEO fails to follow the statutory requirements for making a TCO, the order could be subject to legal challenge, potentially leading to its invalidation. While the Act does not specify maximum penalties for breaches, the broader legislative framework could impose sanctions under general administrative or civil law provisions.