EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1126704
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.
Taghleef Industries applied for a TCO in respect of certain film extrusion line on 09 August 2011.
Instrument
TCO No 1126704 was made on 02 November 2011. It declares that those certain film extrusion line 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. 1126704 is taken to have come into force on 09 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 amended to include a scheme that allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) to apply lower rates of customs duty to certain goods. The Tariff Concession Instrument No. 1126704, made under this scheme, was introduced to address the need for tariff concessions on specific imported goods, in this case, certain film extrusion lines, which were not produced in Australia and had no substitutable alternatives. The instrument was enacted to provide tariff relief to importers of these goods, effective from the date the application was lodged, 09 August 2011. The policy objective, as outlined in the explanatory statement, is to facilitate the importation of goods that are not produced domestically and to ensure that such goods benefit from a reduced rate of customs duty, thereby encouraging trade and potentially lowering costs for businesses importing these items.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, enabling the application of a lower rate of customs duty to certain goods. The Act applies to individuals and entities seeking to import goods that may be subject to a TCO, provided such goods are not specified in section 269SJ, which excludes certain goods from eligibility. A TCO may be applied for under section 269F, and the CEO must decide if the application meets the core criteria, which include the absence of substitutable goods produced in Australia as per sections 269C and 269D. If these criteria are met, the CEO issues a written order under section 269P(3), applying a prescribed lower rate of duty. The TCO applies nationally, affecting the rights of importers beneficially by potentially allowing them to apply for a refund of duty on goods imported since the effective date of the TCO, as per regulation 126(1)(r). The legislation does not disadvantage or impose liabilities on any person for actions taken before the TCO's registration date. The scope of the TCO is extended through subordinate instruments, which detail the specific goods and duty rates involved.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1126704 under the Customs Act 1901 (section 269P(3)) establish the process and criteria for granting a Tariff Concession Order (TCO). Specifically, it mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that an application meets the core criteria, a TCO must be issued. This is predicated on the condition that no substitutable goods are being produced in Australia in the ordinary course of business on the day the application is lodged (section 269C). In the case of Taghleef Industries, the CEO was satisfied that no such goods were being produced, leading to the issuance of TCO No. 1126704 on 02 November 2011. This order specifies that certain film extrusion lines are subject to a 0% duty rate, as opposed to the general rate of 5% (section 269P(3)).
The Act imposes several obligations and requirements on the parties involved. The CEO must accept a valid TCO application and, following this, publish a notice in the Gazette inviting submissions from any person who believes there are reasons the TCO should not be made (subsection 269K(1)). Additionally, the CEO must determine if the application meets the core criteria, specifically whether substitutable goods are being produced in Australia (section 269C). The applicant must provide sufficient evidence that no substitutable goods are produced in Australia on the day the application is lodged. Should the CEO issue a TCO, it is taken to have come into force on the day the application was lodged, not the date of issuance (subsection 269S(1)).
Breaching the terms of a TCO or failing to comply with the obligations set out in the Customs Act 1901 can result in various consequences. While the specific offences and penalties are not detailed in the explanatory statement, generally, under the Customs Act, breaches can lead to civil and criminal penalties. Civil penalties can include fines, and in severe cases, criminal penalties may include imprisonment. The maximum penalties can vary depending on the nature and severity of the breach. Importers, however, can benefit from a refund of duty on goods imported since the TCO came into force, as per paragraph 126(1)(r) of the Regulations, without incurring any liabilities for actions taken before the registration date.