EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1123556
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.
Konecranes applied for a TCO in respect of certain hoists on 15 July 2011.
Instrument
TCO No 1123556 was made on 05 October 2011. It declares that those certain hoists 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. 1123556 is taken to have come into force on 15 July 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. 1123556, enacted under the Customs Act 1901, was introduced to address the need for a streamlined process to grant tariff concessions for specific goods not produced domestically, thus facilitating trade by reducing the customs duty on imported goods that do not have Australian-made substitutes. This instrument was created by the Chief Executive Officer of Customs, who is mandated to evaluate applications for tariff concessions and make written orders if certain criteria are met, as specified in the Act. The policy objective behind this instrument is to encourage trade by making imported goods more competitively priced against locally produced alternatives, thereby benefiting importers and potentially consumers. The instrument came into effect on the date the application was lodged, without adversely affecting the rights of non-Commonwealth entities or imposing any new liabilities.
Scope and Application
The Tariff Concession Instrument No. 1123556 under the Customs Act 1901 applies to any person or entity seeking to import specific goods, namely certain hoists, into Australia. The application of this Act is triggered by an application to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) when the applicant asserts that no substitutable goods are produced in Australia. The instrument was made on 5 October 2011, and it came into effect on 15 July 2011, the date the application was lodged. The geographic scope of this legislation is national, applying across all jurisdictions within Australia. The Act does not disadvantage any person or impose liabilities on anyone for actions taken prior to the date of registration of the TCO. Any importers of the specified goods will be able to apply for a refund of duty on those goods imported since the date the TCO came into force. The application and scope of this Act can be further extended or restricted through subordinate instruments as defined by the Customs Act 1901 and the Customs Tariff Act 1995.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 1123556 under the Customs Act 1901 (the Act) pertain to the process and criteria for granting Tariff Concession Orders (TCOs). Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods, provided the goods do not fall under the prohibited categories outlined in section 269SJ. The CEO is required to assess whether the application meets the core criteria specified in section 269C, which mandates that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The term "substitutable goods" is defined under section 269B, and "goods produced in Australia" and "ordinary course of business" are further defined in sections 269D and 269E, respectively.
The Act imposes several obligations on the parties involved in the TCO process. The CEO must ensure that any application for a TCO is not for goods specified in section 269SJ and must verify that the core criteria outlined in section 269C are met. If the application is deemed valid, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections or reasons why the TCO should not be granted, as stipulated in subsection 269K(1). Additionally, the CEO must make a written TCO order specifying the applicable duty rate for the goods in question, as mandated by subsection 269P(3).
Failure to comply with the provisions of the Act may result in various civil and criminal consequences. The Act does not explicitly state penalties for non-compliance with the TCO process, but general breaches of the Customs Act 1901 can lead to significant penalties. Under section 238 of the Act, any person found guilty of an offence against the Act is liable to a penalty not exceeding 10,000 penalty units, which can be a substantial fine depending on the current penalty unit value. Additionally, officers involved in the administration of the Act can face imprisonment for terms specified in the relevant sections, with the maximum penalties potentially reaching up to five years for serious offences. These penalties underscore the importance of adhering to the requirements set forth by the Act.