EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1125773
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.
Electrolux Home Products applied for a TCO in respect of certain fan motors on 02 August 2011.
Instrument
TCO No 1125773 was made on 28 October 2011. It declares that those certain fan motors 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. 1125773 is taken to have come into force on 02 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 Customs Act 1901 was enacted by the Australian Parliament to provide for the administration of customs and excise duties, among other things. The Tariff Concession Instrument No. 1125773, issued under the authority of the Customs Act, addresses the problem of ensuring that Australian businesses can compete effectively in the global market by providing tariff concessions for certain goods. The instrument was introduced to provide a lower rate of customs duty on specified goods, in this case, certain fan motors, which were subject to a tariff concession order (TCO) made by the Chief Executive Officer of Customs. The policy objective is to ensure that Australian businesses have access to competitively priced inputs, thereby promoting economic efficiency and competitiveness. This instrument specifically aims to benefit Electrolux Home Products by allowing them to import fan motors at a reduced customs duty rate, facilitating their ability to manufacture products at a lower cost and potentially passing these savings onto consumers.
Scope and Application
The Customs Act 1901 provides a framework for the regulation of customs duties in Australia, including provisions for Tariff Concession Orders (TCO) which apply a lower rate of customs duty on certain goods. Specifically, the Tariff Concession Instrument No. 1125773 pertains to the application of a TCO to certain fan motors by Electrolux Home Products, which came into effect on 2 August 2011. This order applies to the specific goods identified in the instrument, reducing their duty rate from the general 5% to free. The Act applies to any entity or person who imports the specified goods into Australia, and the application of the TCO is contingent on the Chief Executive Officer of Customs determining that no substitutable goods were produced in Australia at the time of the application. The application process includes a requirement for the CEO to publish a notice in the Gazette, inviting any interested parties to submit objections, although no such submissions were received in this case. The scope of the TCO is limited to the goods specifically mentioned in the order, and it does not impose liabilities on any person nor affect pre-existing rights adversely.
Key Provisions
The main operative sections of this legislation (F2012L00256) revolve around the creation and effect of Tariff Concession Orders (TCOs) under Part XVA of the Customs Act 1901 (section 269C). Specifically, section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that an application for a TCO meets the core criteria, the CEO must issue a written order that reduces the duty on the specified goods. For the fan motors in question, TCO No. 1125773 was issued on 28 October 2011, declaring that these goods are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with the general duty rate of 5% reduced to free. This effectively means that the specified fan motors now attract no customs duty when imported.
The obligations imposed by the Act on the relevant parties include the requirement for any person seeking a tariff concession to submit an application to the CEO (section 269F). The CEO, upon receiving an application, must determine if it pertains to goods that cannot be subject to a TCO (section 269SJ). If the application is valid, the CEO must assess whether it meets the core criteria, which includes verifying that no substitutable goods are produced in Australia (section 269C). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties regarding the application (subsection 269K(1)). In this instance, no submissions were received, facilitating the CEO's decision to issue the TCO.
Failure to comply with the requirements of the Customs Act 1901 and the associated regulations can result in significant consequences. Breaches may be subject to civil or criminal penalties depending on the nature and severity of the offence. For example, under section 269U, any person who makes a false or misleading statement in an application for a TCO could face criminal penalties, including fines of up to $22,200 or imprisonment for up to two years, or both. Additionally, section 269T specifies that any person who imports goods in a manner that contravenes the provisions of the Act may be subject to penalties, which can include fines up to a significant amount or imprisonment for a defined period. The precise penalties depend on the specific contravention and the discretion of the court.