EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1108980
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.
Austral Bricks (WA) Pty Ltd applied for a TCO in respect of certain concrete panel manufacturing plants on 15 March 2011.
Instrument
TCO No 1108980 was made on 15 June 2011. It declares that those certain concrete panel manufacturing plants 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. 1108980 is taken to have come into force on 15 March 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 was amended with the introduction of the Tariff Concession Instrument No. 1108980, enacted in 2011. This legislation aimed to address the gap in providing tariff concessions for specific goods that are not produced in Australia and do not have substitutable alternatives domestically. The instrument empowers the Chief Executive Officer of Customs to approve Tariff Concession Orders (TCOs) for certain goods, effectively reducing or eliminating customs duty on these items. This was achieved through the application process outlined in the Act, where an applicant must demonstrate that the goods in question are not produced in Australia and have no substitutable counterparts. The policy objective was to support industries by reducing costs associated with importing these goods, thereby promoting economic efficiency and competitiveness. The instrument was enacted by the Australian Parliament and is designed to provide clear guidelines for the application and approval of tariff concessions, ensuring that the rights and interests of all stakeholders, particularly importers, are protected.
Scope and Application
The Customs Act 1901, specifically under Part XVA, enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCO) for certain goods, thereby applying a lower rate of customs duty. The Act applies to any person or entity that wishes to apply for a TCO for goods, provided the goods are not specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO. The application process requires the applicant to demonstrate that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, as per sections 269C and 269P of the Act. The TCO mechanism is intended to benefit importers by potentially reducing their duty liability on the specified goods, as per the Explanatory Statement for TCO No. 1108980, which was applied to certain concrete panel manufacturing plants by Austral Bricks (WA) Pty Ltd. The TCO No. 1108980 came into force on the date the application was lodged, which is 15 March 2011, and does not affect any pre-existing rights or impose new liabilities on persons other than the Commonwealth. The Act's application is subject to national jurisdiction and is complemented by subordinate instruments, such as the Customs Tariff Act 1995, to determine the specific duty rates applicable to goods subject to a TCO.
Key Provisions
Section 269F of the Customs Act 1901 (the Act) allows for a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of goods. This provision initiates the process of obtaining a TCO, which can lead to a lower rate of customs duty for the specified goods. If the CEO receives such an application, they are required to assess whether it meets the core criteria set out in section 269C of the Act. This assessment hinges on whether, at the time of application, substitutable goods were being produced in Australia in the ordinary course of business. The definitions of these terms are provided in sections 269D (goods produced in Australia), 269E (ordinary course of business), and 269F (substitutable goods).
The obligations imposed on parties by the Act include the requirement for the CEO to evaluate the application against the core criteria and, if satisfied, to issue a written TCO. The CEO must also publish a notice in the Gazette, as stipulated in subsection 269K(1) of the Act, inviting any interested parties to submit their views on the application. This transparency measure ensures that the process is open and any objections can be considered. Additionally, the CEO must ensure that the TCO does not adversely affect the rights of any person, as outlined in subsection 269S(1) of the Act, particularly in terms of imposing liabilities for actions taken before the TCO's effective date.
Failure to comply with the provisions of the Act can result in various consequences. The Act does not explicitly detail specific offences or penalties for breaches of the TCO provisions. However, general provisions within the Customs Act 1901 and the Customs Tariff Act 1995 (the Tariff) may apply, potentially leading to civil or criminal penalties. For instance, misleading or false declarations, which could be part of a TCO application, might incur penalties under section 228 of the Customs Act 1901, which can include fines of up to $22,200 for individuals and significantly higher penalties for corporations. Additionally, any failure to comply with the TCO's terms or the obligations imposed by the Act could lead to further administrative or legal consequences, although these would be determined by the specific context of the breach.