EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1120044
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.
Safety Equipment Australia Pty Ltd applied for a TCO in respect of certain filters on 21 June 2011.
Instrument
TCO No 1120044 was made on 10 November 2011. It declares that those certain filters 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. 1120044 is taken to have come into force on 21 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 was enacted to regulate customs and provide for the imposition and collection of customs duty. The Act was introduced to address the need for a comprehensive legal framework governing the importation of goods into Australia, ensuring that customs duties are appropriately levied and managed. This legislation was enacted by the Australian Parliament and its primary policy objective is to facilitate international trade while protecting domestic industries and revenue. The Act provides the authority for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) under which a lower rate of customs duty applies to specified goods. The explanatory statement for Tariff Concession Instrument No. 1120044, made in 2011, outlines the process by which an application for a TCO was accepted and processed, culminating in the concession of duty on certain filters from 21 June 2011, the date the application was lodged. The explanatory statement notes that no objections were received during the consultation period, and the TCO was implemented without any adverse effect on the rights of persons other than the Commonwealth.
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 (CEO) to apply lower rates of customs duty on certain goods. This Act applies to any individual or entity seeking tariff concessions for goods imported into Australia, provided the goods do not fall under the specific exclusions outlined in section 269SJ of the Act. The core criteria for granting a TCO are detailed in sections 269C, 269B, and 269D, which essentially require that the goods in question are not being produced in Australia in the ordinary course of business and have no substitutable goods domestically. The TCO mechanism operates nationally across Australia, under the Commonwealth jurisdiction, and extends its application potentially through subordinate instruments that might further detail the processes or criteria for concessions. Notably, the TCO does not affect any pre-existing rights or impose liabilities on individuals or entities other than the Commonwealth, ensuring that the rights of importers are positively impacted, including the ability to apply for duty refunds on goods imported since the TCO's effective date.
Key Provisions
The primary sections of this legislation (F2012L00312) pertain to the application and implementation of Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F of the Act allows any person to apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning goods. If the application is valid and not related to goods specified in section 269SJ, the CEO must determine if the application meets the core criteria outlined in section 269C. This core criteria is satisfied if, on the date of application, no substitutable goods are being produced in Australia in the ordinary course of business. If these criteria are met, the CEO must issue a written TCO order, specifying that the goods in question are subject to a prescribed tariff concession as detailed in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed on the parties by this Act include the requirement for applicants to ensure their applications meet the specified criteria, including the absence of substitutable goods being produced in Australia. The CEO is obligated to process the application, publish a notice in the Gazette, and invite submissions from any interested parties, though in this instance, no submissions were received. The CEO must also decide whether to issue a TCO based on the criteria outlined in the Act. Importers, on the other hand, have the obligation to apply for a refund of duties paid on goods imported since the TCO was taken to have come into force, as per paragraph 126(1)(r) of the Regulations.
In terms of consequences for non-compliance, the Act does not explicitly state civil or criminal penalties for breaching the conditions of a TCO. However, failure to adhere to the requirements for applying for and receiving a TCO could result in the goods being subject to the general rate of duty rather than the concessional rate. There are also potential administrative consequences if the CEO finds that an application does not meet the core criteria, which could lead to the denial of the TCO. For importers, not applying for a duty refund under the TCO conditions could mean losing out on the financial benefits intended by the legislation.