EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1111201
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.
Cullin Innovation applied for a TCO in respect of certain shower water regulators on 04 April 2011.
Instrument
TCO No 1111201 was made on 27 June 2011. It declares that those certain shower water regulators 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. 1111201 is taken to have come into force on 04 April 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 duties and other import charges. The Act was amended to include provisions for Tariff Concession Orders (TCOs) to allow for tariff reductions on certain goods, thereby addressing the gap in providing flexibility in customs duties to support specific economic and policy objectives. The instrument F2011L02310, known as Tariff Concession Instrument No. 1111201, was introduced to provide tariff concessions on certain shower water regulators, as requested by Cullin Innovation. This concession was made under the authority granted by section 269F of the Customs Act 1901, ensuring that the application met the core criteria specified by sections 269C and 269D of the Act. The policy objective of this measure is to provide tariff relief for goods that do not have substitutable alternatives produced in Australia, thereby supporting economic efficiency and competitiveness. The instrument came into effect on 4 April 2011, with no adverse impact on existing rights or liabilities of non-Commonwealth entities.
Scope and Application
The Tariff Concession Instrument No. 1111201 applies to goods, specifically certain shower water regulators, and is enacted under the Customs Act 1901, which governs customs duties in Australia. This legislation applies to the entity or individual who lodges an application for a Tariff Concession Order (TCO) with the Chief Executive Officer (CEO) of Customs. The TCO itself applies to the specified goods and provides a concession on the duty that would otherwise apply under the Customs Tariff Act 1995. The scope of the Act is national, as it pertains to Commonwealth legislation. The Act does not apply to goods specified in section 269SJ of the Customs Act, which lists goods that cannot be subject to a TCO. The application process and the criteria for approval, including the requirement that no substitutable goods were produced in Australia, are defined in the Act and are subject to further interpretation through subordinate instruments. The TCO, once registered, does not retroactively affect the rights or liabilities of any party except the Commonwealth, ensuring that the rights of importers are beneficially affected from the date the TCO is taken to have come into force.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1111201 under the Customs Act 1901 are sections 269C, 269F, 269P, and 269S. Section 269F (1) allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ, they must determine whether the application meets the core criteria set out in section 269C. If the CEO is satisfied that the application meets these criteria, they must make a TCO under section 269P(3), declaring that the goods are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995. This specific TCO No. 1111201 applies to certain shower water regulators, declaring them subject to item 50 of Schedule 4 with a duty rate of free, as opposed to the general rate of 5%.
The obligations imposed by this legislation on the parties include the requirement for applicants to ensure their applications for TCOs meet the core criteria, which involves demonstrating that no substitutable goods are produced in Australia at the time of application. The CEO, on the other hand, is obligated to assess the validity of the application, consult with relevant stakeholders by publishing a notice in the Gazette as per section 269K(1), and make a decision based on the criteria outlined in section 269C. Once a TCO is issued, the CEO must ensure that the rights of non-Commonwealth entities are not adversely affected and that no new liabilities are imposed on them.
Any breaches of the provisions under the Customs Act 1901, including the misuse of TCOs, can result in both civil and criminal penalties. For example, under section 283, providing false or misleading information in an application for a TCO can lead to a penalty of up to five times the amount of duty that would have been payable if the false or misleading information had not been provided. Additionally, under section 284, a person found guilty of an offence against the Act can face imprisonment for up to five years or a fine of up to 10,000 penalty units, or both. These penalties underscore the importance of compliance with the legislative requirements and the potential consequences for non-compliance.