EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1107490
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.
Cumi Australia applied for a TCO in respect of certain stainless steel pipe flanges on 28 February 2011.
Instrument
TCO No 1107490 was made on 23 May 2011. It declares that those certain stainless steel pipe flanges 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. 1107490 is taken to have come into force on 28 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, established a framework for the regulation of customs duties and the facilitation of international trade. A notable aspect of this Act is the inclusion of Part XVA, which allows for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This provision was introduced to address the need for flexibility in tariff rates to support industries that may be at a disadvantage due to local production of substitutable goods. The explanatory statement for Tariff Concession Instrument No. 1107490 illustrates the process by which the CEO assesses applications for TCOs, ensuring that such concessions are granted only when there are no substitutable goods produced in Australia. This mechanism aims to provide tariff relief to importers, thereby promoting competitive and efficient trade practices without imposing additional liabilities on the parties involved.
Scope and Application
The Customs Act 1901, under its Part XVA, allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, providing lower customs duty rates on certain goods. This legislative framework applies to any individual or entity that applies for a TCO for goods not specified in section 269SJ, which lists goods ineligible for tariff concessions. The TCO mechanism is activated when an applicant, such as Cumi Australia in this instance, lodges an application for specific goods, in this case, certain stainless steel pipe flanges, and the CEO determines that these goods meet the core criteria, particularly that no substitutable goods are produced in Australia. This determination leads to the issuance of a TCO, as evidenced by TCO No. 1107490, which applies to the specified stainless steel pipe flanges and reduces their duty rate to zero. The Act's reach is national, operating under the Commonwealth's jurisdiction, and its application can be extended or restricted via subordinate instruments. Importantly, the TCO does not retroactively disadvantage any person or impose liabilities for actions taken before its registration, though it does afford importers the right to seek refunds for duties paid on eligible goods imported since the TCO's effective date.
Key Provisions
Section 269F of the Customs Act 1901 allows an individual or entity to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of certain goods. A TCO can be sought if the goods are not listed in section 269SJ, which specifies goods that cannot be subject to a TCO. The CEO must then determine whether the application meets the core criteria stipulated in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. If satisfied that the application meets these criteria, the CEO must make a written order, a TCO, specifying the applicable customs duty rate, as outlined in Schedule 4 to the Customs Tariff Act 1995.
The Customs Act 1901 imposes several obligations on the CEO when processing a TCO application. Once an application is accepted as valid, the CEO must publish a notice in the Gazette, inviting any person who believes the TCO should not be made to submit their reasons to the CEO. This process ensures transparency and allows for potential objections to be considered. Additionally, under the Act, the CEO must ensure that any TCO made does not disadvantage any person other than the Commonwealth or impose liabilities on any person in relation to actions taken before the TCO was registered.
Breaching the provisions of the Customs Act 1901 can result in various consequences. If a TCO is made in error, or if an application for a TCO is submitted without meeting the core criteria, this could be considered an offence under the Act. The penalties for such breaches may include fines or imprisonment, depending on the severity of the breach. For instance, section 269AA of the Act outlines penalties for making false or misleading statements in a TCO application, which can result in a substantial fine. The maximum penalties are determined based on the nature and impact of the offence, with more severe breaches attracting higher penalties.