EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1107494
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.
Fibretank Systems Pty Ltd applied for a TCO in respect of certain glass fabric laminates on 28 February 2011.
Instrument
TCO No 1107494 was made on 24 May 2011. It declares that those certain glass fabric laminates 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. 1107494 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, provides a framework for the regulation of customs and excise within Australia. This includes the ability for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which allow for a lower rate of customs duty on specified goods. The Tariff Concession Instrument No. 1107494, issued in 2011, applies to certain glass fabric laminates, reducing the duty from the general rate of 5% to free, provided no substitutable goods are produced in Australia. This concession was granted following an application by Fibretank Systems Pty Ltd, and was effective from the date of application on 28 February 2011. The instrument was made without any objections, and it does not impose any liabilities on any person other than the Commonwealth, thereby positively impacting the rights of importers by allowing them to apply for duty refunds on eligible goods.
Scope and Application
The Tariff Concession Instrument No. 1107494, made under the Customs Act 1901, pertains to the application of Tariff Concession Orders (TCOs) to specific goods, in this case, certain glass fabric laminates. The Act applies to any person or entity seeking to import these goods, with the primary aim of providing a lower rate of customs duty for the specified goods. The geographic reach of this Act is national, as it applies across Australia under the federal Customs Act 1901. The application process is overseen by the Chief Executive Officer of Customs (CEO), who must determine if the application meets the core criteria outlined in the Act, specifically that no substitutable goods were produced in Australia on the day the application was lodged. The TCO exempts the specified goods from the general customs duty rate, offering a duty-free concession instead. The Act does not extend or restrict its application through subordinate instruments but relies on the specific criteria set out within the Customs Act 1901 to determine the eligibility of goods for tariff concessions.
Key Provisions
The Tariff Concession Instrument No. 1107494 under the Customs Act 1901, establishes the conditions under which a Tariff Concession Order (TCO) may be issued by the Chief Executive Officer of Customs (CEO) (section 269F). The main operative section of this instrument (section 269C) specifies that an application for a TCO will meet the core criteria if, at the time the application is lodged, no substitutable goods are being produced in Australia in the ordinary course of business. This definition is further expanded upon in sections 269B and 269D, clarifying that 'goods produced in Australia' and 'ordinary course of business' are to be understood as per their definitions provided in the Act, and 'substitutable goods' are those produced in Australia that could be used interchangeably with the goods specified in the TCO application. If the CEO is satisfied that these criteria are met, they must then issue a written TCO (section 269P(3)).
This legislation imposes specific obligations on the CEO when considering an application for a TCO. Once an application is accepted as valid, the CEO must publish a notice in the Gazette inviting any interested parties to submit any objections or reasons why the TCO should not be granted (subsection 269K(1)). The CEO must consider these submissions before making a final decision on the TCO. Additionally, the CEO is required to ensure that the TCO does not adversely affect any existing rights of third parties or impose new liabilities (subsection 269S(1)).
Failure to comply with the provisions of the Customs Act 1901, including those related to the issuance of TCOs, may result in civil or criminal penalties. While the Explanatory Statement does not explicitly state the penalties for non-compliance, under Australian law, breaches of customs regulations can lead to fines or imprisonment, depending on the severity of the offence. For instance, section 232 of the Customs Act provides for fines of up to $22,200 and/or imprisonment for up to two years for breaches of certain customs regulations. Furthermore, any party found to be knowingly involved in fraudulent activities related to customs duties may face more severe penalties, including fines of up to $222,000 and/or imprisonment for up to 10 years (section 232A). The precise penalties would be determined based on the specific nature and impact of the breach.