EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1119277
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.
Everdure Australia Pty Ltd applied for a TCO in respect of certain subassemblies on 16 June 2011.
Instrument
TCO No 1119277 was made on 05 September 2011. It declares that those certain subassemblies 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. 1119277 is taken to have come into force on 16 June 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 Parliament of Australia, provides for the regulation of customs and excise duties. Part XVA of this Act introduces a scheme for Tariff Concession Orders (TCOs), which allow the Chief Executive Officer of Customs to reduce or eliminate customs duty on certain imported goods under specific conditions. This mechanism was introduced to address the problem of ensuring that Australia’s import policies support competitive industries by allowing tariff relief on goods that cannot be produced domestically, thereby promoting economic efficiency and fairness. The explanatory statement for Tariff Concession Instrument No. 1119277 clarifies that this instrument was made to address an application by Everdure Australia Pty Ltd for tariff concessions on certain subassemblies, which were deemed not to have substitutable goods produced in Australia, thus meeting the core criteria for such concessions. The policy objective is to facilitate the import of goods that are not produced locally, thereby benefiting importers and supporting the competitive position of Australian industries.
Scope and Application
The Tariff Concession Instrument No. 1119277 applies to the concession of customs duty on certain subassemblies, as determined by the Chief Executive Officer (CEO) of Customs under section 269F of the Customs Act 1901. This Act applies to individuals or entities that import goods that meet the criteria for a Tariff Concession Order (TCO). The instrument specifically relates to the application submitted by Everdure Australia Pty Ltd on 16 June 2011, for which a TCO was issued on 5 September 2011, granting free customs duty on these particular subassemblies. The concession is contingent upon the CEO’s satisfaction that no substitutable goods were produced in Australia in the ordinary course of business at the time the application was lodged, as per sections 269C and 269P(3) of the Act. The TCO is effective from the date of the application, 16 June 2011, and it does not affect any rights of third parties prior to the registration date, while providing benefits to importers who can apply for duty refunds under the Customs Regulations. The Act operates nationally, with the CEO’s decisions extending across all jurisdictions within Australia.
Key Provisions
The key operative sections of Tariff Concession Instrument No. 1119277 (subparagraph 269F(3)) establish the process by which the Chief Executive Officer of Customs (CEO) can make a Tariff Concession Order (TCO). If an applicant, such as Everdure Australia Pty Ltd, submits an application for a TCO (section 269F), the CEO must determine whether it meets the core criteria outlined in section 269C of the Customs Act 1901. This involves verifying that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). If the CEO is satisfied that the application meets these criteria, they must issue a written TCO (section 269P(3)), specifying that the goods in question are subject to a prescribed tariff item in Schedule 4 to the Customs Tariff Act 1995. In this case, the CEO issued TCO No. 1119277 on 5 September 2011, declaring that certain subassemblies are subject to item 50 of Schedule 4, resulting in a duty rate of free rather than the general rate of 5%.
The obligations imposed by the Act on the parties governed by it include ensuring that applications for TCOs are made in accordance with section 269F and that they meet the core criteria specified in section 269C. The CEO must also publish a notice in the Gazette inviting submissions on the proposed TCO (subsection 269K(1)). Additionally, the CEO must ensure that the TCO does not disadvantage any person other than the Commonwealth or impose any liabilities on such persons in respect of actions taken before the TCO's effective date (subsection 269S(1)). The CEO must further ensure that the TCO's commencement date aligns with the date the application was lodged.
Breach of the provisions outlined in the Customs Act 1901 can result in various civil and criminal consequences. While the explanatory statement does not detail specific offences or penalties for failing to comply with the TCO provisions, breaches of other sections of the Customs Act can attract significant penalties. For instance, knowingly making a false statement in a customs declaration can result in a civil penalty of up to 10,000 penalty units or a criminal penalty of up to 10 years imprisonment, or both, under section 231 of the Act. Additionally, failure to comply with customs regulations can result in financial penalties, seizure of goods, and other enforcement actions. It is essential for applicants and other parties to adhere to the requirements set forth in the Act to avoid such consequences.