EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1131715
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.
Hammelmann applied for a TCO in respect of certain mechanical seals on 16 September 2011.
Instrument
TCO No 1131715 was made on 23 January 2012. It declares that those certain mechanical seals 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. 1131715 is taken to have come into force on 16 September 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, enacted by the Australian Parliament, facilitates the application of tariff concession orders (TCOs) to reduce customs duty on specific goods, provided certain criteria are met. This legislative framework was introduced to address the problem of high customs duties that may hinder the importation of essential goods, thereby encouraging fair trade practices and providing economic relief to businesses. The Tariff Concession Instrument No. 1131715, made on 23 January 2012, exemplifies the application of this scheme, providing a tariff concession on certain mechanical seals, as the CEO was satisfied that no substitutable goods were produced in Australia. The policy objective underpinning this legislative measure is to ensure that the importation of specific goods is facilitated without imposing undue burdens on businesses, thereby supporting economic growth and international trade.
Scope and Application
The Tariff Concession Instrument No. 1131715, made under the Customs Act 1901, applies to individuals and entities seeking tariff concessions for specific goods, in this case certain mechanical seals, imported into Australia. The instrument facilitates a reduction in customs duty on these goods from the general rate of 5% to a free rate, provided that the application meets the core criteria set out in the Act. The scope of the legislation extends to ensuring that the goods in question are not substitutable by products already manufactured within Australia. The application process involves the Chief Executive Officer of Customs who must assess whether the goods are not produced in Australia in the ordinary course of business. This instrument is a Commonwealth initiative, impacting national trade by easing the import duties for specified goods, thereby benefiting importers who can apply for duty refunds on goods imported since the concession's effective date. The instrument does not impose any new liabilities on entities and does not retroactively affect the rights of any person other than the Commonwealth.
Key Provisions
Section 269F of the Customs Act 1901 allows an individual or entity to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of specific goods. The Act sets out that the CEO must decide whether the application meets the core criteria, which includes the absence of substitutable goods produced in Australia on the day the application was lodged, as defined in section 269C. If these criteria are met, the CEO is required to issue a written TCO, specifying the goods and the applicable rate of duty, as outlined in section 269P(3).
Under the Act, the CEO must ensure that any TCO application is not in respect of goods specified in section 269SJ, which are ineligible for a TCO. Additionally, the CEO is mandated to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested parties to submit objections to the order. This process is detailed in subsection 269K(1). The TCO will then come into effect on the day the application was lodged, as specified in subsection 269S(1). Importantly, the TCO does not retroactively affect the rights of any person, including imposing liabilities for actions taken before the TCO's effective date.
The Customs Act 1901 imposes several obligations on the CEO and applicants for a TCO. The CEO must rigorously assess each application against the criteria set out in the Act, including verifying that no substitutable goods were produced in Australia on the application date. The CEO must also publish a notice in the Gazette to allow for objections, ensuring a transparent process. Conversely, applicants must ensure their applications are valid and meet all stipulated criteria, including providing all necessary information and evidence that no substitutable goods were produced in Australia.
The Customs Act 1901 includes provisions for offences and penalties related to breaches of the Act. While the Explanatory Statement does not specify particular offences under the TCO regime, it is reasonable to infer that any misrepresentation or fraudulent activity in the application process could lead to civil or criminal penalties under the broader customs legislation. Penalties may include fines or imprisonment, depending on the severity of the breach and the specific provisions of the Customs Act 1901.