EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1127653
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.
Energy Options International applied for a TCO in respect of certain LED Lights on 16 August 2011.
Instrument
TCO No 1127653 was made on 14 November 2011. It declares that those certain LED Lights 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. 1127653 is taken to have come into force on 16 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 Commonwealth Parliament to regulate the importation and exportation of goods into and out of Australia. It established a framework for the collection of customs duty and provided mechanisms for tariff concessions, among other objectives. The Act was intended to fill the need for a comprehensive customs regulation system to manage the country's trade, ensure revenue collection, and protect domestic industries. Tariff Concession Orders (TCOs) are a specific feature of the Act, allowing the Chief Executive Officer of Customs to reduce or eliminate customs duty on certain imported goods under specific conditions. This legislative measure helps address economic and competitive challenges faced by industries and businesses within Australia by allowing for tariff reductions on goods that cannot be produced domestically or are not produced in sufficient quantities.
The explanatory statement for Tariff Concession Instrument No. 1127653 highlights the application and approval process for a TCO concerning certain LED Lights submitted by Energy Options International. The CEO of Customs reviewed the application and found that no substitutable goods were produced in Australia, meeting the core criteria outlined in the Customs Act 1901. Consequently, a TCO was issued, reducing the general duty rate of 5% to free duty for these LED Lights. The TCO was published in the Gazette, inviting any objections, though none were received. The TCO came into effect on 16 August 2011, the date the application was lodged, and it benefits importers by potentially allowing them to claim a refund of duty paid on these goods since that date.
Scope and Application
The Tariff Concession Instrument No. 1127653, made under the Customs Act 1901, pertains to the granting of tariff concessions on specific LED Lights. This legislation applies to Energy Options International, the entity that applied for the concession, and to any importers of the specified LED Lights that benefit from the reduced duty rate. The geographic reach of this Act is national, as it is a Commonwealth instrument. The Act does not specify any exclusions or exemptions, apart from those outlined in section 269SJ of the Customs Act 1901, which lists goods that cannot be subject to a Tariff Concession Order (TCO). The application of the Act may be extended or restricted through subordinate instruments, such as the Customs Tariff Act 1995. The CEO of Customs is responsible for determining whether an application for a TCO meets the core criteria, which include ensuring that no substitutable goods are produced in Australia. If the CEO is satisfied that the application meets these criteria, they must make a written TCO, as demonstrated in this instance where the CEO declared that the specified LED Lights are subject to a duty rate of free, as opposed to the general rate of 5%.
Key Provisions
The main sections of the Customs Act 1901 (the Act) relevant to Tariff Concession Orders (TCOs) are sections 269C, 269F, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. If the CEO is satisfied that the application meets the core criteria, which are outlined in section 269C, they must make a written order declaring the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. The TCO reduces the rate of customs duty on these goods.
The Act imposes specific obligations and requirements on both applicants and the CEO. An applicant must submit a valid application for a TCO, ensuring that the goods are not specified in section 269SJ of the Act, which excludes certain goods from TCOs. The CEO must assess whether the application meets the core criteria, which includes verifying that no substitutable goods were produced in Australia on the day the application was lodged, as defined by sections 269D, 269E, and 269F. If the criteria are met, the CEO must publish a notice in the Gazette inviting submissions from interested parties, as required by subsection 269K(1). In this case, no submissions were received.
The Act also outlines potential consequences for non-compliance. While the explanatory statement does not detail specific offences, penalties, or civil/criminal consequences for breaches related to TCOs, it is understood that failing to comply with the requirements or making false statements in an application could result in legal action. However, the maximum penalties for such breaches are not specified in this document. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and it does not impose any liabilities on any person.
In summary, the Tariff Concession Instrument No. 1127653 applies to certain LED Lights and sets a zero duty rate for these goods. The Act facilitates the process by which such concessions can be granted, provided the application meets the specified criteria. The CEO’s role is to assess applications and make written orders accordingly, while ensuring transparency through the publication of notices in the Gazette. The rights of importers are protected, and they may apply for duty refunds on imports made since the TCO came into effect.