EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1114304
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.
Arlec Australia Ltd applied for a TCO in respect of certain work lights on 05 May 2011.
Instrument
TCO No 1114304 was made on 01 August 2011. It declares that those certain work lights 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. 1114304 is taken to have come into force on 05 May 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 amended to introduce a scheme allowing for Tariff Concession Orders (TCOs) to be issued by the Chief Executive Officer of Customs. This was enacted to provide relief on customs duty for goods where there are no substitutable goods produced in Australia, thereby encouraging the importation of such goods. The problem it aimed to address was the potential high cost of importing goods when locally produced alternatives exist, which could stifle competition and increase consumer prices. The Tariff Concession Instrument No. 1114304, enacted on 1 August 2011, is an example of this scheme in action. Arlec Australia Ltd applied for a TCO for certain work lights, and the CEO issued TCO No. 1114304, setting the duty rate at free, as no substitutable goods were being produced in Australia. The TCO was published in the Gazette with an invitation for objections, none of which were received. The TCO came into effect on the day the application was lodged, 5 May 2011, with no retroactive liabilities imposed on importers who could apply for a duty refund for goods imported since that date.
Scope and Application
The Tariff Concession Instrument No. 1114304 under the Customs Act 1901 applies to the goods specified in the application submitted by Arlec Australia Ltd on 5 May 2011. This instrument specifically concerns certain work lights that qualify for a concession under the Customs Tariff Act 1995. The instrument is designed to provide a lower rate of customs duty on these goods, effectively making them duty-free, provided the application meets the core criteria outlined in the Customs Act. The CEO of Customs must ensure that the application is not in respect of goods specified in section 269SJ of the Act, which prohibits certain goods from being subject to a Tariff Concession Order (TCO). If the CEO determines that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, a TCO can be made. The TCO has a retrospective effect, taken to have come into force on the date the application was lodged, in this case, 5 May 2011. This means that importers can apply for a refund of duty on goods imported since that date. The instrument does not affect any rights of persons other than the Commonwealth or impose any liabilities on such persons in relation to actions taken before the registration date.
Key Provisions
The main operative sections of the Customs Act 1901, as amended by Tariff Concession Instrument No. 1114304, pertain to the creation and application of Tariff Concession Orders (TCOs) (sections 269F, 269C, 269B, and 269P). Section 269F allows any person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO on goods. The CEO must determine whether the application meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. If these criteria are satisfied, the CEO must issue a written order (a TCO) that specifies the goods to which the concession applies (section 269P(3)). In this case, Tariff Concession Order No. 1114304 was made on 01 August 2011, declaring that certain work lights are subject to a TCO, with the rate of duty on these goods being reduced to free, down from the general rate of 5%.
The Customs Act 1901 imposes several obligations on the parties involved in the TCO process. The CEO is required to assess applications for TCOs against the core criteria and ensure that no substitutable goods were produced in Australia on the application date. The CEO must also publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not be made (section 269K(1)). Furthermore, the Act mandates that a TCO comes into force on the date the application is lodged, as specified in section 269S(1). Additionally, the TCO must not disadvantage any person or impose liabilities for actions taken before the TCO's effective date (section 269S(1)).
The Customs Act 1901 and the associated regulations include specific provisions addressing breaches and penalties. While the Act does not explicitly detail penalties for non-compliance with the TCO process itself, breaches related to customs duties generally can attract penalties under other sections of the Customs Act. For example, knowingly making a false statement or providing false information in a customs document can lead to civil penalties (section 227A) and criminal penalties (section 227B). The maximum penalties can include substantial fines and imprisonment, depending on the severity and intent of the offence.
The Customs Regulations 1993 also provide mechanisms for the recovery of duties and penalties. For instance, section 126(1)(r) allows importers to apply for a refund of duty on goods imported since the TCO came into force. The Act ensures that rights of importers are beneficially affected by the TCO, without imposing any liabilities on persons other than the Commonwealth for actions taken before the TCO's effective date. This framework ensures that while the TCO provides tariff concessions, it does not unfairly burden any party involved in the importation process.