EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1128946
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.
Silver Batts Insulation Systems applied for a TCO in respect of certain fabric on 25 August 2011.
Instrument
TCO No 1128946 was made on 07 November 2011. It declares that those certain fabric 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. 1128946 is taken to have come into force on 25 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 regulate the importation and exportation of goods, among other things. The Act provides the legal framework for the administration of customs duties, excise duties, and other charges on imported and exported goods. The Act’s Part XVA establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, allowing for lower rates of customs duty on specified goods. This mechanism was introduced to address the gap in providing tariff relief for goods that are not produced in Australia and for which there are no substitutable domestic products, thus encouraging imports of specific goods under certain conditions.
Tariff Concession Instrument No. 1128946, made on 7 November 2011, is an example of this scheme in action. It was introduced following an application by Silver Batts Insulation Systems for a TCO on certain fabric, which was accepted as a valid application on 25 August 2011. The Chief Executive Officer of Customs was satisfied that no substitutable goods were produced in Australia for these specific fabrics, meeting the core criteria outlined in the Act. Consequently, the instrument declares that these certain fabrics are subject to a free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, rather than the general rate of 5%. The instrument came into force on the date the application was lodged, 25 August 2011, and benefits importers by allowing them to apply for a refund of duty on goods imported since that date.
Scope and Application
The Tariff Concession Instrument No. 1128946, enacted under the Customs Act 1901, applies to the application process for Tariff Concession Orders (TCOs) concerning specific goods. It specifically applies to individuals or entities that seek to reduce or eliminate customs duty on certain imported goods by applying for a TCO. The process is overseen by the Chief Executive Officer of Customs, who is mandated to determine whether the application meets the core criteria as stipulated in the Act. These criteria include ensuring that no substitutable goods are produced in Australia at the time the application is lodged, thereby justifying the tariff concession. The TCO in question pertains to "certain fabric" and was granted following Silver Batts Insulation Systems' application on 25 August 2011, with the concession coming into effect on the same date. The instrument applies nationally across Australia, and the TCO itself does not impose any disadvantages or liabilities on individuals or entities other than the Commonwealth, while potentially benefiting importers through duty refunds. The scope of the legislation is extended through subordinate instruments as necessary, facilitating the administration and enforcement of the tariff concessions.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1128946 are contained within the Customs Act 1901, particularly sections 269C, 269B, 269D, 269E, and 269F. Section 269F allows for applications to be made to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). Section 269C outlines the core criteria that must be satisfied for the CEO to consider the application, which includes ensuring that no substitutable goods were produced in Australia on the date the application was lodged. Sections 269B, 269D, and 269E provide definitions necessary to understand the terms used in the core criteria. If the CEO is satisfied that the application meets these criteria, a TCO is issued, as stated in section 269P(3), declaring the goods to which a specific item of Schedule 4 of the Customs Tariff Act 1995 applies.
The obligations imposed on the parties governed by this legislation are primarily on Silver Batts Insulation Systems, the applicant for the TCO, and the CEO of Customs. Silver Batts must ensure that their application is valid and meets the core criteria as defined by the Customs Act 1901. The CEO is required to assess the application, consult with relevant stakeholders, and publish a notice in the Gazette inviting any submissions against the application. If no submissions are received, the CEO must make a written TCO if the application meets the core criteria. Additionally, the CEO must ensure that the TCO does not adversely affect the rights of any person other than the Commonwealth.
The legislation does not explicitly state offences or penalties for breaches of the Tariff Concession Instrument No. 1128946. However, the failure to comply with the requirements of the Customs Act 1901 and the subsequent TCO could potentially lead to legal consequences. For example, if an importer or any other party misuses the TCO by importing goods that do not genuinely qualify for the tariff concession, they could face legal action for misrepresentation or fraud. The penalties for such actions would be determined by the relevant criminal or civil laws, but they could include fines or imprisonment, depending on the severity of the breach.
The Tariff Concession Instrument No. 1128946 introduces specific civil and criminal consequences for non-compliance, although these are not explicitly stated in the instrument itself. For instance, if Silver Batts Insulation Systems or any other entity falsely claims that goods qualify for a TCO, they could face charges under the Crimes Act 1914 for fraud or deception, which could result in significant fines or imprisonment. Similarly, importers who improperly claim tariff concessions on goods could be subject to penalties under the Customs Act 1901, including financial penalties and the potential confiscation of goods. The specific maximum penalties would be determined by the relevant courts based on the nature and extent of the breach.