EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1112409
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.
Stauff Corporation applied for a TCO in respect of certain pressure testing hoses on 13 April 2011.
Instrument
TCO No 1112409 was made on 04 July 2011. It declares that those certain pressure testing hoses 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. 1112409 is taken to have come into force on 13 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 Tariff Concession Instrument No. 1112409 was enacted in 2011 under the Customs Act 1901 to address a specific need for tariff concessions on certain goods, particularly in the case of pressure testing hoses. This instrument was introduced to facilitate lower customs duties on these goods, thereby supporting Australian businesses by reducing their import costs. The instrument was enacted by the Chief Executive Officer of Customs following an application from Stauff Corporation and after ensuring that no substitutable goods were produced in Australia. The objective of this legislative action was to provide tariff relief without imposing any disadvantage or liabilities on individuals or businesses other than the Commonwealth. The instrument came into force on the date the application was lodged, providing immediate benefits to importers who could apply for duty refunds on goods imported since the effective date.
Scope and Application
The Customs Act 1901, through Part XVA, governs the making of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs (CEO), applicable to individuals and entities seeking reduced customs duty on specific goods. The Act applies to goods that are not specified in section 269SJ of the Act, which lists those goods ineligible for TCOs. The TCO mechanism is limited to goods where no substitutable products are produced in Australia in the ordinary course of business, as defined in sections 269D, 269E, and 269F. The scope of this Act extends nationally, affecting all importers and exporters within Australia, thereby influencing trade practices and import/export duties. Exclusions are explicitly mentioned in section 269SJ, which prohibits certain goods from TCOs. Additionally, the Act allows for further specification and regulation through subordinate instruments, which can extend or restrict the application of the TCOs based on changing trade conditions and requirements. The commencement of a TCO is effective from the date of application, as outlined in subsection 269S(1) of the Act.
Key Provisions
The main operative sections of this legislation, Tariff Concession Instrument No. 1112409, pertain to the process of making Tariff Concession Orders (TCOs) and the application of such orders to specific goods. Section 269F of the Customs Act 1901 allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning goods, provided the goods are not specified in section 269SJ, which lists items that cannot be subject to a TCO. If the application meets the core criteria outlined in section 269C, which is when no substitutable goods are produced in Australia in the ordinary course of business, the CEO must make a TCO (section 269P(3)). This instrument specifically applies to certain pressure testing hoses and declares that these goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a duty rate of free instead of the general 5%.
The Customs Act 1901 imposes several obligations on the parties involved in the TCO process. The CEO of Customs is required to assess whether an application meets the core criteria for a TCO. This involves verifying that no substitutable goods are produced in Australia as per section 269C. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, as per section 269K(1). Once a TCO is made, the rights of importers are positively affected, allowing them to apply for a refund of duty on goods imported since the TCO was taken to have come into force, under paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not disadvantage or impose liabilities on any person in respect of actions taken before the TCO came into force.
Under the Customs Act 1901, there are specific civil and criminal consequences for breaches of the legislation. While the explanatory statement does not detail specific penalties for non-compliance with the TCO provisions, breaches of the Customs Act 1901 generally can lead to significant penalties. For instance, knowingly making a false statement in connection with a customs matter can result in a fine of up to 10,000 penalty units or imprisonment for up to five years, or both, as per section 272. Additionally, failing to comply with a requirement to provide information or documents can lead to penalties under section 273, which can include fines of up to 11,000 penalty units or imprisonment for up to five years, or both. These maximum penalties reflect the seriousness of non-compliance with customs legislation and the need for accurate and honest dealings in the customs process.