EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1112020
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.
Rehau applied for a TCO in respect of certain compression tool sets on 08 April 2011.
Instrument
TCO No 1112020 was made on 04 July 2011. It declares that those certain compression tool sets 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. 1112020 is taken to have come into force on 08 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 was enacted to provide for the administration of customs and excise duties, and it includes provisions for the establishment of tariff concession orders (TCOs). These orders grant tariff concessions on certain goods, thereby reducing or eliminating customs duty on those goods. The Tariff Concession Instrument No. 1112020, made on 04 July 2011, addresses the specific need to provide tariff concessions on certain compression tool sets, as applied for by Rehau on 08 April 2011. The Chief Executive Officer of Customs (CEO) determined that no substitutable goods were produced in Australia, thereby satisfying the core criteria under section 269C of the Act. Consequently, the CEO issued the TCO, which declared that these tool sets are subject to a free rate of duty as per item 50 of Schedule 4 to the Customs Tariff Act 1995, replacing the previous general rate of 5%. The instrument aims to provide tariff relief without imposing any new liabilities or disadvantaging existing rights, while potentially benefiting importers who may apply for duty refunds on imports made since the TCO's effective date.
Scope and Application
The Customs Act 1901, under Part XVA, outlines a scheme where the Chief Executive Officer (CEO) of Customs may issue Tariff Concession Orders (TCOs) that apply a lower rate of customs duty to specified goods. A TCO application can be submitted by any person to the CEO, and if the application does not pertain to goods excluded under section 269SJ, the CEO assesses whether it meets the core criteria set out in section 269C. This involves determining whether there are no substitutable goods produced in Australia in the ordinary course of business as defined by sections 269D and 269E. If the criteria are satisfied, the CEO issues a written order, a TCO, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question. For instance, Tariff Concession Order No. 1112020, made on 4 July 2011, granted a free rate of duty to certain compression tool sets previously subject to a 5% duty. The application of this order is retrospective to the date the application was lodged, 8 April 2011, and it does not adversely affect the rights of any person or impose new liabilities, though it does benefit importers by allowing them to apply for a refund of duties paid on the goods since the effective date of the TCO.
Key Provisions
The main operative sections of the Customs Act 1901, as applied in Tariff Concession Instrument No. 1112020, establish a framework for granting Tariff Concession Orders (TCOs) (ss 269F, 269C, 269B, 269D, 269E, 269P). A TCO allows for a lower rate of customs duty on specified goods when the Chief Executive Officer (CEO) of Customs determines that the application for the concession meets the core criteria, specifically that no substitutable goods are being produced in Australia at the time the application is lodged (s 269C). If the CEO is satisfied that the application meets these criteria, a TCO is made, and the specified goods are subject to a prescribed rate of duty outlined in Schedule 4 of the Customs Tariff Act 1995 (s 269P(3)). For the particular case of Rehau's application regarding certain compression tool sets, Instrument TCO No. 1112020 was made, declaring that these goods are subject to item 50 of Schedule 4, resulting in a duty rate of free instead of the general rate of 5% (s 269S(1)).
The Act imposes certain obligations and requirements on the parties involved. Firstly, the CEO must ensure that any TCO application is not in respect of goods specified in section 269SJ, which excludes certain goods from being subject to a TCO (s 269SJ). If the application passes this initial check, the CEO must then determine if the application meets the core criteria by verifying that no substitutable goods are being produced in Australia at the time the application was lodged (ss 269C, 269D, 269E). Once the CEO is satisfied that the core criteria are met, they must make a written TCO (s 269P(3)). Additionally, as soon as practicable after accepting a TCO application as valid, the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made (s 269K(1)). For Instrument TCO No. 1112020, the CEO did not receive any submissions in response to the published notice.
In terms of offences, penalties, or consequences for breach, the Act does not explicitly outline specific penalties for failing to comply with the TCO provisions. However, any failure to adhere to the terms of the TCO could potentially lead to legal challenges or disputes regarding the tariff concessions granted. For instance, if a party were to improperly claim a TCO benefit or if the CEO were to improperly grant a TCO, it could result in civil or criminal consequences depending on the nature and severity of the breach. Nonetheless, the Act ensures that the TCO does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on any person in respect of anything done or omitted to be done before the date of registration (s 269S(1)). Importers, however, may benefit from being able to apply for a refund of duty on goods imported since the TCO came into force (Reg 126(1)(r)).