EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1112366
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.
Viridian applied for a TCO in respect of certain glass melting furnace refractory blocks and/or shapes and/or tiles on 12 April 2011.
Instrument
TCO No 1112366 was made on 04 July 2011. It declares that those certain glass melting furnace refractory blocks and/or shapes and/or tiles 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. 1112366 is taken to have come into force on 12 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 imposition and collection of customs duty. Part XVA of this Act introduces the scheme for Tariff Concession Orders (TCOs), which can be made by the Chief Executive Officer of Customs to apply lower rates of customs duty on specific goods. This legislative provision was introduced to address the issue of providing tariff relief for certain goods where there are no substitutable products manufactured domestically, thereby encouraging the importation of these goods. The policy objective is to ensure that Australian consumers and businesses have access to a broader range of goods at a reduced cost, which in turn can stimulate economic activity and competition. The explanatory statement details the process by which a TCO is made, including the criteria that must be met and the rights of those affected by such orders. The instrument in question, TCO No. 1112366, grants a tariff concession for certain glass melting furnace refractory blocks and/or shapes and/or tiles, with the aim of benefiting importers and consumers by reducing the duty on these specific goods to zero.
Scope and Application
The Customs Act 1901, specifically through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aiming to provide lower rates of customs duty on specified goods. This mechanism is applicable to any person who meets the core criteria set out in section 269C of the Act, ensuring that the goods in question are not substitutable by products manufactured domestically, as defined under section 269D and 269E of the Act. The legislation extends its reach across the Commonwealth of Australia, affecting the importation of goods that are subject to the Tariff Concession Orders. Notably, the Act excludes certain goods as specified in section 269SJ, which cannot be subject to a TCO. The application of the Act is further shaped by subordinate instruments, which may specify additional conditions or criteria for the concession orders. The Tariff Concession Instrument No. 1112366, for example, exemplifies this by detailing a specific case where certain glass melting furnace refractory blocks and/or shapes and/or tiles were granted a tariff concession, setting the duty rate at free as opposed to the general rate of 5%. The process mandates public consultation as stipulated in section 269K(1) of the Act, although in this instance, no submissions were received, leading to the issuance of the TCO on 4 July 2011, effective from 12 April 2011.
Key Provisions
The main provisions of Tariff Concession Instrument No. 1112366 under the Customs Act 1901 are centred around the concession of customs duty for specific goods. Section 269F (subsection 269P(3)) allows for the application of Tariff Concession Orders (TCOs) by interested parties. When the Chief Executive Officer of Customs (CEO) receives an application, they are required to determine if it meets the core criteria outlined in sections 269C and 269B. If the CEO is satisfied that the application is valid and meets these criteria, they must then issue a written order, which is the TCO. This order declares that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, which in this case is item 50, with a rate of duty that is free, as opposed to the general rate of 5%.
The Act imposes several obligations on the parties involved. Firstly, any person who wishes to apply for a TCO must ensure that their application is valid and meets the core criteria specified in the Act. This includes ensuring that the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. Secondly, the CEO is required to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. This ensures transparency and allows for any objections to be heard before the TCO is issued. Once the CEO determines that the application meets the criteria, they must make the TCO and declare the goods as specified in Schedule 4 to the Customs Tariff Act 1995.
There are potential consequences for any breach of the provisions within the Customs Act 1901 and the related regulations. While the explanatory statement does not detail specific offences or penalties for breaching the TCO provisions, breaches of the Customs Act generally can lead to civil or criminal penalties. Under section 230 of the Customs Act 1901, for instance, a person can be liable to a penalty of up to $22,200 for a strict liability offence and up to five times the value of the duty and taxes not paid for an intentional breach. Additionally, any person who knowingly makes a false or misleading statement in an application for a TCO could face criminal charges, potentially resulting in fines or imprisonment. These penalties underscore the importance of compliance with the Act and its regulations.