EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1107493
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 pipes on 28 February 2011.
Instrument
TCO No 1107493 was made on 06 June 2011. It declares that those certain pipes 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. 1107493 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 Parliament of Australia, establishes a framework through which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. This legislative instrument addresses the need for reduced customs duties on specific goods, thereby facilitating trade and benefiting importers. The problem it addresses is the potential high cost of importing certain goods due to customs duties, which can hinder trade and economic growth. The policy objective is to provide relief to importers by reducing or eliminating customs duty on goods specified in a TCO, provided that no substitutable goods are produced in Australia. Cumi Australia's application for a TCO concerning certain pipes exemplifies this process, leading to a tariff concession that significantly lowers the duty on these goods from 5% to free.
Scope and Application
The Tariff Concession Instrument No. 1107493, established under the Customs Act 1901, applies to specific goods for which a Tariff Concession Order (TCO) has been sought and approved by the Chief Executive Officer of Customs. This legislation is pertinent to entities or individuals who are importing goods that meet the criteria for tariff concessions, specifically where no substitutable goods are produced in Australia. The instrument’s scope includes the reduction of customs duty rates for certain specified goods, in this case, certain pipes, as long as the application for the TCO meets the core criteria set out in the Act. The instrument operates on a national level, governed by the Commonwealth, and its application is not restricted by state or territory boundaries. The Act does exclude certain goods from eligibility for a TCO, as outlined in section 269SJ. The TCO itself, which came into effect on 28 February 2011, provides a free duty rate for the specified goods, replacing the general duty rate of 5%, and does not impose any liabilities on persons other than the Commonwealth.
Key Provisions
The key provisions of Tariff Concession Instrument No. 1107493 (referred to as TCO No. 1107493) relate to the granting of tariff concessions under the Customs Act 1901. Section 269F (1) allows an application to be made to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) concerning certain goods. If the CEO determines that the application complies with the core criteria outlined in sections 269C and 269B, the CEO is required to issue a TCO. This was the process followed in the case of Cumi Australia’s application for a TCO concerning certain pipes, which was granted on 6 June 2011. The TCO declared that these pipes were subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with a resulting duty rate of free, down from the general rate of 5%.
The obligations imposed on the parties by this legislation are primarily on the CEO. Upon accepting a valid TCO application, the CEO must publish a notice in the Gazette, inviting submissions from any interested parties who may oppose the TCO. Section 269K(1) of the Act outlines this requirement. In the case of TCO No. 1107493, no submissions were received by the CEO in response to the Gazette notice. The TCO also ensures that it does not affect the rights of any person other than the Commonwealth, as stipulated in section 269S(1). Importantly, the rights of importers are beneficially affected by this TCO, as they can apply for a refund of duty on goods imported since the date the TCO was taken to have come into force.
The Customs Act 1901 does not explicitly state any specific offences, penalties, or consequences for breaches of a TCO. However, any breaches of the Customs Act or associated regulations could result in civil or criminal penalties. For example, knowingly making a false statement or representation in connection with the importation or exportation of goods can attract a penalty of up to 10,000 penalty units or imprisonment for five years, or both, under section 224A of the Act. Additionally, failing to comply with a TCO could potentially lead to the imposition of retrospective duties or other financial penalties under the Customs Act. The exact penalties would depend on the nature and severity of the breach.