EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1125731
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.
Dux Manufacturing Ltd applied for a TCO in respect of certain foam machines on 01 August 2011.
Instrument
TCO No 1125731 was made on 17 October 2011. It declares that those certain foam machines 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. 1125731 is taken to have come into force on 01 August 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. 1125731, enacted in 2011, amends the Customs Act 1901 to address the need for tariff concessions on specific goods, thereby facilitating trade and economic efficiency. The instrument, introduced by the Australian Government through the Customs Act, aims to provide relief on customs duty for particular goods when no substitutable goods are produced domestically. This legislative measure is designed to support businesses like Dux Manufacturing Ltd by reducing the cost of importing specific machinery, in this case, certain foam machines, which are essential for their operations.
The Customs Act 1901, enacted by the Australian Parliament, provides a framework under which the Chief Executive Officer of Customs can grant tariff concessions on goods, provided the application meets the stipulated criteria. In this instance, the CEO was satisfied that no substitutable goods were produced in Australia for the foam machines in question, leading to the concession that reduced the duty rate from 5% to free. This initiative not only benefits the applicant but also potentially other importers by lowering the overall cost of importing these goods, thereby encouraging trade and economic activity.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs) established under Part XVA, applies to applications for a reduction in customs duty rates on specific goods. An application for a TCO can be made by any person, and if approved by the Chief Executive Officer of Customs (CEO), it results in a lower customs duty rate for the goods specified in the order. The application process is subject to certain conditions, including the absence of substitutable goods produced in Australia in the ordinary course of business. The geographic reach of this legislation is national, as it operates under the Commonwealth's authority to regulate customs duties. Notably, the Act excludes certain goods from being subject to a TCO, as specified in section 269SJ of the Act. Additionally, the application of the Act may be extended or further defined through subordinate instruments, although specific details are not provided in this explanatory statement. The TCOs themselves do not affect the rights of any person as at the date of registration, nor do they impose any liabilities on individuals, except in relation to the Commonwealth.
Key Provisions
The Customs Act 1901, specifically under Part XVA, provides for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (s 269F). These orders allow for a lower rate of customs duty on goods specified in the order. To be eligible for a TCO, the goods in question must not be specified in section 269SJ of the Act, which outlines those goods that cannot be subject to a TCO (s 269SJ). Furthermore, the application for a TCO must meet the core criteria established by section 269C of the Act, which requires that on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions for key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269P respectively.
The obligations imposed by the Act on parties applying for a TCO are straightforward. Firstly, the applicant must ensure that the goods they wish to apply for a concession on are not specified in section 269SJ, meaning they must not be of a type that cannot be subject to a TCO. Secondly, the applicant must provide sufficient evidence to satisfy the CEO that no substitutable goods were produced in Australia on the date the application was lodged. This involves demonstrating that the goods in question do not have Australian equivalents that could serve the same purpose. Once the CEO is satisfied that the application meets the core criteria, they must make a written order declaring the goods eligible for the concession (s 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who may object to the TCO being made, although no submissions were received in this instance (s 269K(1)).
In terms of consequences for non-compliance, the Act does not explicitly outline specific offences or penalties for breaches related to TCOs. However, the general principles of administrative law and the obligations imposed by the Act suggest that failure to comply with the requirements or providing false information in an application could lead to sanctions. These could include the refusal to grant the TCO, revocation of an existing TCO, or other administrative penalties. It is also important to note that the Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the implementation of a TCO (s 269S(1)). This means that the TCO does not impose any new liabilities or disadvantage anyone who was not already subject to such liabilities prior to the TCO coming into force.