EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1110927
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.
Diab Australia applied for a TCO in respect of certain foam sheets on 31 March 2011.
Instrument
TCO No 1110927 was made on 20 June 2011. It declares that those certain foam sheets 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. 1110927 is taken to have come into force on 31 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 enacted by the Parliament of Australia to regulate customs and border control measures. A gap in the legislation that needed addressing was the potential for certain goods to be subject to tariff concessions without a formal process, which could lead to inconsistencies and disputes. To address this, the Act was amended to establish a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). The policy objective of this scheme is to ensure that tariff concessions are granted in a transparent and consistent manner, taking into account whether substitutable goods are produced in Australia. The CEO is required to make a TCO if an application meets the core criteria, which includes the condition that no substitutable goods were produced in Australia at the time of the application. This process aims to provide clarity and fairness in the application of tariff concessions for goods entering Australia.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the issuance of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs (CEO). This legislation applies to any person who can demonstrate that goods for which they seek a TCO are not produced in Australia and are substitutable, thereby meeting the core criteria outlined in section 269C of the Act. The geographic reach of this Act is national, as it applies across Australia, and it is enforced by the Commonwealth. The application process for a TCO involves an assessment by the CEO, who must ensure that the goods in question are not specified in section 269SJ as ineligible for tariff concessions and that no substitutable goods are being produced domestically, as defined by sections 269D and 269E of the Act. The scope of the Act can be extended or restricted through subordinate instruments, which may provide further details on the application criteria or specific exclusions. For instance, the CEO is mandated by section 269K(1) to publish notices in the Gazette to invite submissions on TCO applications, ensuring transparency and opportunity for public input. The Tariff Concession Instrument No. 1110927, issued on 20 June 2011, exemplifies this process, as it grants free duty on certain foam sheets following a successful application by Diab Australia, with no submissions received against the application.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 1110927 under the Customs Act 1901 (section 269F) outline the process for applying for a Tariff Concession Order (TCO) and the criteria for the Chief Executive Officer of Customs (CEO) to consider when making such an order. The instrument (section 269P) specifies that a TCO is issued if the CEO determines that no substitutable goods are produced in Australia in the ordinary course of business at the time the application is lodged. For this particular instrument, TCO No. 1110927 applies to certain foam sheets and declares that they are subject to a zero rate of duty as specified in item 50 of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes specific obligations on the CEO when processing a TCO application. Upon receiving an application, the CEO must first ensure that the application pertains to goods that are not listed in section 269SJ of the Act, which details goods ineligible for a TCO. The CEO must then verify whether the application meets the core criteria, as stipulated in section 269C. This involves confirming that no substitutable goods are being produced in Australia in the ordinary course of business on the date the application was lodged, as defined by sections 269D and 269E. If the CEO is satisfied that the application meets these criteria, they must issue a written TCO.
The Act also requires the CEO to publish a notice in the Gazette, inviting any interested parties to lodge submissions if they believe the TCO should not be granted (section 269K). In this instance, no submissions were received, allowing the TCO to proceed. The TCO becomes effective on the date the application was lodged (section 269S), which in this case is 31 March 2011.
Failure to comply with the requirements of the Act can result in significant consequences. While the explanatory statement does not specify particular offences or penalties, the Act provides for enforcement mechanisms. Generally, breaches of customs legislation can lead to civil or criminal penalties, including fines and imprisonment, depending on the severity of the breach. The maximum penalties are determined by the specific provisions of the Customs Act 1901 and any related regulations. The Act ensures that the rights of importers are protected and that they can apply for refunds of duty paid on the goods from the effective date of the TCO. Importantly, the TCO does not impose any new liabilities on any person beyond the Commonwealth.