EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1113307
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.
Ontex NV applied for a TCO in respect of certain adhesives on 21 April 2011.
Instrument
TCO No 1113307 was made on 11 July 2011. It declares that those certain adhesives 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. 1113307 is taken to have come into force on 21 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 by the Australian Parliament to provide a framework for the regulation of customs and excise duties. A particular gap it sought to address was the need for a mechanism to provide tariff concessions for certain imported goods under specific circumstances. To this end, Part XVA of the Act introduces the concept of Tariff Concession Orders (TCOs), which can be issued by the Chief Executive Officer of Customs when certain criteria are met, such as the absence of substitutable goods produced in Australia. The policy objective underlying the introduction of TCOs is to facilitate the importation of goods that are not domestically produced, thereby benefiting consumers and industries that rely on such imports. Ontex NV's application for a TCO concerning certain adhesives in 2011 exemplifies the application of this legislative scheme, leading to Instrument No. 1113307 that granted a tariff concession on these goods, reducing their duty rate from 5% to free.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to any person or entity that wishes to import goods and is subject to the conditions and criteria stipulated within the Act. The scope of this legislation encompasses the process of applying for a TCO in respect of goods, provided they are not specified in section 269SJ as ineligible. The Act applies nationally across Australia, governed by Commonwealth legislation. It is important to note that a TCO cannot be made if substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269D, 269E, and 269F of the Act. The Act allows for the extension or restriction of its application through subordinate instruments, ensuring flexibility in its implementation. The rights of individuals or entities importing goods will be positively affected by the concession, whereas the TCO does not disadvantage or impose liabilities on any person other than the Commonwealth for actions taken prior to the TCO’s registration.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, 269K, 269P, and 269S of the Customs Act 1901. Section 269F allows for the application of a Tariff Concession Order (TCO) by a person to the Chief Executive Officer of Customs (CEO). If the CEO determines that the application meets the core criteria, which include that no substitutable goods were produced in Australia in the ordinary course of business (section 269C), the CEO is required to make a written order (section 269P(3)). The TCO is considered to have come into effect on the day the application was lodged (section 269S(1)). Additionally, section 269K mandates the CEO to publish a notice in the Gazette, inviting submissions from any interested parties if the application is deemed valid.
The obligations imposed by the Act on the parties it governs primarily centre around the application and assessment of TCOs. The CEO must rigorously evaluate each application to ensure it meets the core criteria and must publish notices inviting submissions if an application is accepted. If the CEO is satisfied that the application meets these criteria, a TCO must be issued, and it comes into effect on the application date. The Act also places a responsibility on the CEO to consider any submissions received and ensure that the rights of all parties are protected, particularly regarding any liabilities or disadvantages imposed by the TCO.
The legislation outlines specific offences and penalties for breaches, although it does not explicitly state penalties in this particular TCO. Generally, under the Customs Act 1901, breaches of customs regulations can lead to both civil and criminal consequences. Civil penalties can include fines, which may vary depending on the severity and nature of the breach. Criminal penalties may include imprisonment, particularly in cases of wilful or repeated breaches. The exact penalties are detailed in other sections of the Act and related regulations, which may specify maximum fines and imprisonment terms for various offences.
The Explanatory Statement for Tariff Concession Instrument No. 1113307 clarifies that the TCO applies to certain adhesives and sets their duty rate to free, effective from 21 April 2011. It also confirms that the CEO published a notice inviting submissions but did not receive any in response. The TCO ensures that importers can apply for duty refunds for goods imported since the effective date and does not impose any liabilities on any person. The rights of importers are positively affected, while no disadvantages or liabilities are imposed on non-Commonwealth entities.